The goal of investment properties is to put money to work today and allow it to increase so that you have more money in the future. The profit, or what is known as the “return,” you make on your property investments must be enough to cover the risk you take, taxes you pay, and the costs of owning the real estate investment such as utilities, regular maintenance, and insurance.
What is an Investment Property
An investment property is any property you buy in the hopes of making a profit. The most common type of investment property is a long term rental property. Investors purchase single family homes or apartment buildings and rent them out.
Investment properties can also be rented out in the short term. Many investors are buying properties in popular vacation spots and renting them out through Airbnb and VRBO. If you are looking for popular vacation destinations or to see what exotic locations may be an option for you check out https://www.utovacation.com.
Whether you choose a long term or short term rental for your investment property it is a good idea to look for tips on how to protect one of your most valuable assets such as installing heatline.com products if you live in colder climates. Older homes can have problems with pipes freezing and bursting in the winter months. I have experienced this myself with and older home. Homeowners in places like Alaska, Michigan, Upstate New York, Canada, and other states bordering Canada, can benefit greatly from protecting their home with heat insulated water lines.
Things to Consider When Buying an Investment Property
An investment property can turn into a money pit if you don’t do your homework. If the property already has tenants, request a background check and credit report from the current property owner. You don’t want to inherit a tenant who doesn’t pay their bills.
Neighbors are a great resource when you are considering buying an investment property. Introduce yourself as a real estate investor and ask about the current owner and tenants of the property you are interested in. Most people love to gossip. If there have been any noise complaints or police activity, the neighbors will tell you.
If you’re interested in short term rentals, ensure there are no restrictions put in place by a homeowners’ association. Many HOA agreements have a clause preventing rental periods shorter than 30 days.
Do You Need a Property Management Company
Managing a rental property is a lot of work. Are you prepared to answer frantic phone calls at 3 o’clock in the morning when a toilet overflows? Do you know how to effectively screen potential tenants? Are you willing to spend your weekends doing maintenance? Don’t worry; a management company will take the stress out of owning a rental property. If you want to learn more about what you may need to maintain or what kind of repairs may come up on a regular basis, I suggest getting as much information from the previous owners before signing on the dotted line. See if they kept maintenance schedules and logs and if they have receipts for recent repairs. Some will be covered by a warranty so it is always good to have prior knowledge of what work and updates have been done beforehand. If the previous owners used a property management company, find out who they were and what kind of work they did as well.