An investment property does not have to be your ideal dream home. If you don’t intend to live in the property, remember to take a look at it with “investment eyes” only. Here are some buying tips.
Study the property and the location
Research the value appreciation history of the location and the possible rental income of the property. The local real estate agents are a good place to start.
If the property you’re interested in has been rented before, examine the previous rental records. If you’re purchasing a unit, the property manager should have a comprehensive record of the unit and other comparable properties.
It’s essential to purchase an area with strong rental appeal, e.g. near schools, stores, transportation, or close to parks and beach fronts. You don’t want to sit on a vacant property, or have to “settle” on a tenant with marginal credit or income.
What’s the ideal investment property loan for myself?
Mortgages fall under four categories, basic variable, fixed, offset and line of credit. In order to reduce your payment amount you may choose interest only. Be sure you discuss your personal qualifying capabilities, and what types of loans would be applicable for the type of property you’re buying. If it’s a non-owner occupied purchase, you will have to come in with a larger down payment.
Do your evaluations
Get your property and pest inspections done. It may cost a little up front, but if you discover problems it will save you a lot of money and headaches, in the long run.
Take a more detailed look
When you’ve discovered a property you’re really curious about, here are just some of the things to pay attention for:.
Make sure you inspect the property and look hard at any buyer disclosures.
See it at numerous times of the day/night and week so you can gauge traffic and noise levels.
A rainy day is perfect to see if currently there are any roof leakages.
Are there any holes in the walls (indoor and exterior)?
If it is an old residence and the carpet is lifting up in places, have a look at the state of the floorboards.
You may want to evaluate the property for environmental issues, radon, mold, asbestos…
Is there a moldy smell? It may suggest water issues.
Check the walls on the other side of the bathroom for signs of water damage/rotting wood.
Know the contract.
Use a good real estate agent that is well versed in the latest sales documentation and local laws. Are you pleased with what’s included in the sale? Are all the fittings included? The outdoor BBQ? Tools in the shed? Any furniture or appliances included? Ask as many concerns as you need to feel secure. Make sure it’s all documented within the agreement.
Negotiating a purchase price.
Naturally sellers want the highest price for their property and buyers wish to pay the least amount. The seller anticipates you to make a lower offer, but not so low that it’s out of the question. Commonly, people are prepared to meet somewhere between. Have recent comparable sales records to justify your purchase offer price.