Multi-Unit Residential Investments
Finding a suitable investment property can be difficult. Knowing the ins and outs of real estate investments, can provide you with a great method to increase your wealth
Purchasing real estate as an investment can be both profitable and perilous. More and more people seem to be turning to rental properties as an investment. This type of investment is favorable because it avoids the swoops and swoons of a fluctuating stock market. Rental incomes can be a good way for someone to build wealth if you follow a few simple steps.
Start by setting out a time line for your investment. If your goal is to get a quick return on your investment, I would suggest that you would better suited to something different. Real Estate lends itself well to investors looking for gradual investment growth, and residual income streams.
Also if you are looking at keeping your property for 20 years, then expenses like a new roof, updated electrical and plumbing, as well as the regular building maintenance needs to be considered in your decision. If you are only planning a 5 year investment, then avoiding those major improvements becomes important.
Decide what you are capable of completing on your own, versus what you need to contract out. Long term investments that require costly immediate repairs make it difficult to establish a purchase price. Be weary of the fixer upper bargain property.
Second, establish whether your potential investment property is a winner or a flop. Each residential rental property should be viewed similar to that of a residential home. Have the property inspected by knowledgeable professionals before committing to the deal.
If you are deciding to purchase a larger residential unit, or an older building that has been converted, testing the soil for contaminates is recommended. Finding out after you have made a purchase that there was once an underground fuel tank that has seeped into the soil could make for a costly mistake.
Finally, establish whether the tenants in the residential unit you are considering are in good rental standing. A tenant that is in arrears can be difficult to evict or to get back in good rental standing. Your investment in rental property can only be measured by the consistent income you derive from it. A residential unit that is tenanted by an individual that fails to pay their rent can greatly affects the profitability of your building.
Get your credit in order. You will need your credit in good standing when you go to purchase an investment property. Many lenders expect a substantial down-payment for investment property as well.
Plan for a substantial up front expenses, when making this type of purchase.
Try not to overpay. I would suggest that you make your profit when you purchase your building, not when you go to sell the building. This means that if you overpay for a property you severely impact your ability to recover your initial investment. You need to examine the numbers to see what kind of profit the building brings in and then decide whether the price you are paying is inline with the building income.