Real estate investing is a great way to maximize your profits, provided that you do your homework and choose a lucrative, steady cash-flow producing unit. If you have the ready cash available and are prepared to make a real estate investment purchase, take some time out first. Research your product, and the area in which it is located. Look to the future and make some determinations, if possible, on the financial outlook of the community. By combining research, common sense, and the knowledge of local residents and real estate agents, you can channel your money into the property that is right for you.
One of the things I have learned the hard way is that it is important, if you like to be a hands-on landlord, to have your rental property close to you. So if you like to do your own repairs, or you like to do a casual drive-by now and then to make sure everything looks good, you will want to investigate purchasing property that is within driving distance of where you live. Ten minutes is ideal. But if this does not matter to you, and you are either willing to make the drive to do repairs, or you want to hire someone to do them for you, or you plan on hiring a property manager to take care of these details for you, then you pretty much have the world at your fingertips. With that in mind, here are some things to look for, to maximize your real estate investment dollars.
- Properties near larger cities will command a higher rental rate than properties in rural areas.
These properties will also cost more than properties in rural areas, so take a good look at your budget first, and find out what you are willing to spend, and are prepared to spend. If you are looking for a higher rental rate, you will need your property to be closer to a large city. Where there is a large city, there are big businesses. Where there are big businesses, there are people who earn money working for those big businesses. These people have the money, and need to be close to their workplace. Therefore, there will be a need for your rental. The downside to this, is lots of rentals being available, so be sure to check out the current housing market, and the competition. Just because you purchase a pretty townhouse near the big city does not mean you will get renters right away. But if you purchase that townhouse one mile away from the “Fancy Car” company, in a safe section of town, and you have a competitive rental price, then you should get renters fast. It all depends on the demographics, and each city is different. So look around, and find out what you need to know.
- Properties in the Northeast are expensive, but hold their dollar value, and go up in value considerably over time.
This phrase could also be applied to all of the other hot real estate markets all over the country, with California coming to mind, specifically San Francisco. But if you are willing to spend the extra money and buy in a suburb of New York City, for example, it is guaranteed that you are going to do well. Of course, you have to have a lot of upfront cash to begin with, for a down payment. But properties around the New York City metro area hold their value and go up in value for one simple reason. The space is limited, and you can’t create more land. You can build up, but to build out, you have to have more land, which is in very limited supply, or none at all. Or, to get to the area with more land, you have to drive a two hour commute, which some people do, but not many people want to do. Having a property in this area, provided it is well maintained and in good condition, will nearly guarantee you a constant flow of lots of cash, and when you decide to sell, you will definitely make a profit. But once again, do your research, because statistics can vary from area to area. This opinion is a generalization, albeit a fairly accurate one. To help you find the best deals in the real estate market, you might want to consider the help of professional surveyors such as Surveys Northeast. This will make your hunt easier and simpler as they will help you with the data that you need.
- Properties near areas of attraction seem to do well.
By an area of attraction, I mean simply what it says. An area that attracts people to it. Usually a specific group. For example, the coast. Beach combers, retirees, families with young children, and wealthy families looking for second homes, all flock here. With this specific attraction, you will have a stronger crowd flow to the area, and a need for rentals. This creates a lucrative environment for you. However, there are some drawbacks. With the coast as an example, you may have renters competing for your unit in the summer, but no one wanting it in the winter. And, if you decide to beat the system, and get a year round renter, your overall income for the year may not equal the income you would receive if you simply rent it out for the higher rates only in the summer. Plus, if you go for the year-round tenant route in a seasonal area, you are also incurring year-round wear to your property. You have to weigh the pros and cons, and run the numbers. Also, it goes without saying that coastal properties have their own unique set of circumstances and worries for the property owner, what with hurricanes and high insurance rates. Also, rentals that attract young, beer-drinking party crowds can really take a beating. These are some things to keep in mind. Once again, do your homework.
The best favor you can do yourself when buying an investment property is research. Carry a notebook and pen around with you to take notes on potential properties. Research the classifieds, talk to locals at restaurants in the town you’re looking at, and talk to real estate agents. Look online for crime statistics, as real estate agents will likely not divulge these details to you. It is your job to determine what works best for you. Make a list of what your expectations are from the rental unit, and then how you can go about making these expectations a reality. Perhaps you are a real handyman, and like to do all your own repairs to save money. Or perhaps, it is worth it to you to hire a property manager to take care of these things for you, so you can be free to vacation at will. It all really depends on you and your needs. Real estate ownership can be challenging, rewarding and lucrative. It is all about making good decisions. Review the tips I have suggested here, ask questions, and do some of your own research, while analyzing honestly what your needs are, and you will make a good investment decision that really works for you and your family.