Are you interested in purchasing your first investment property? There are several reasons why people have been investing in real estate for centuries. Some of the benefits include inflation hedging, stability, diversification, and the potential for higher returns. With this, here are a few tips for buying an investment property.
Have a sizeable down payment
Did you know that mortgage insurance is not applicable to investment properties? As such, they require larger down payments. A person who wishes to purchase their first investment property, they will need at least a 20% down payment. In addition to the downpayment, you also need to have the cash available to make necessary renovations on the home.
Leave emotions out of it
You must leave your feelings at the door when it comes to investing in real estate. This is where many people go wrong and end up losing money. Let the numbers do the talking and leave your heart out of it. Investors sometimes forget that an investment property should only be looked at as a business investment. Emotions can distract you from this important realty. The more you end up spending on a home, the less profit you can expect down the line.
Know your numbers
The best way to protect yourself from making a bad investment is to calculate numbers beforehand. If you do not know the profits and expenses ahead of time, you are not making a sound business decision. Be sure that you consider the amount of money that you have, the amount of money you need to borrow, the amount of money you need to make renovations/repairs, as well as the operating costs. By knowing your numbers, you lessen the risk associated with purchasing a property.
