I have compiled this short but fundamental list to take into consideration if you are looking to buy a lucrative and highly profitable Investment Property.
1. Choose a proven real estate professional that specializes in investment properties.
Ensuring you are using the right investment property specialist will give you the peace of mind and is essential for a successful investment. Check the Realtor’s track record, ask to see client testimonials and try to contact former investors.
2. Make sure you understand the basics of property investment & current market conditions.
While you should use a Realtor who specializes in investment properties during the investment process, you cannot entirely rely on them. Make sure that you understand the basics of property investment and all financial details involved.This will enable you to spot any potential risks ahead of time to find a profitable investment opportunity.
3. Have a clear picture of what type of investment property to buy.
There are a variety of investment properties, duplex, triplex’s, fully commercial, mixed use properties, or overseas properties. The type of property will also determine your investment strategy, so make sure that you know what kind of property and investment strategy you are looking for to achieve your desired profits.
4. Is the property in favorable condition and is it in a good location?
These should be crucial considerations, as you will either want to lease the property, or sell it to another property investor or home-buyer. A property that is in good condition might be more expensive, but buying a relatively cheap property in a bad condition will always incur significant additional repair costs. Whether you want to find tenants, or resell the property, the location will be crucial, and a property in a bad neighbourhood or in an economically vulnerable location will rarely turn out to be a good investment.
5. Will you find tenants for your property?
It is essential to make sure that you can find tenants for your property. This will depend on the location, property condition, the rent, and many other factors. Some Realtor's will even help place tenants in the investment property.
6. Do you understand how to maximize your returns?
Achieving a positive cash flow will make your property investment successful. While it is obvious that every investor wants to maximize returns, you will have to understand how to make this happen. Finding a property possibly below market value but in a good location and good condition will be crucial for the success of your investment. You will also have to understand how to minimize the costs, including repairs, and taxes, and you should also make sure that the property remains occupied for most of the year.
7. Do you understand the risks?
Property investment will never be without its risks, and you will thus need to understand all the risks involved. Economic growth might not be as expected, or you might not find tenants for a longer period. By understanding these risks, and developing an effective risk-mitigation strategy, you will find it easier to turn your property into a successful investment.