A profitable investment property can be a decades-spanning boon to your finances. On the flipside, a less-than-ideal investment property is liable to serve as a source of financial strain for years to come. Suffice it to say, an investment property is not a purchase you’ll want to regret. However, as you’ll find, there are a multitude of reasons for which people rue their decision to invest in certain properties. Taking the time to familiarize yourself with some of these reasons can help reduce your odds of sinking money into a property that’s unlikely to generate the desired returns.
They Failed to Research the Location
When seeking out an investment property, you have absolutely nothing to gain from skimping on location research. At one time or another, all of us have heard real estate professionals chant the mantra “Location, location, location,” and as it turns out, they have a very good reason for doing so. Although a property’s size and overall condition are undeniably important, its location plays an outsized role in determining its true value – and how much money it stands to make investors.
So, no matter how impressed you are with a certain property, it is imperative that you put forth the effort to engage in basic location research. In order to determine how much demand for housing an area has, there are a variety of factors you’ll need to look into – with local rental rates, home values and median income being chief among them. This research will provide you with a solid understanding of how much you can expect to make with a property and potentially prevent you from making a costly mistake. Sunshine State-based investors looking for a lovely place to purchase a good investment property should have a look at Bradenton, FL real estate.
They Failed to Consider Local Property Values
As touched upon above, local home values should factor heavily into your location research. Looking into local property values can prove helpful for two reasons. For starters, it will enable you to see what properties that are similar to the one(s) you’re considering are worth, thereby providing you with the knowledge to make a fair offer. Secondly, it will effectively prevent you from being taken advantage of by price-gouging sellers.
If you discover that properties that are similar to one you’re looking at are selling for much lower prices, you have every right to ask the seller what makes their property so special. Additionally, if the seller offers an unsatisfactory justification – or fails to offer any justification at all – you should strongly consider walking away from the deal.
They Didn’t Work with Certified Inspectors
Purchasing an investment property that hasn’t been subjected to a formal inspection represents a tremendous gamble. And given how much capital such an investment requires, this is a gamble no one should ever take. So, regardless of how confident you are in the condition of a property or how many personal walkthroughs you’ve conducted, it is imperative that you work with a certified home inspector.
To start with, an inspection from a certified professional may be a prerequisite for having the property insured. Furthermore, no matter how thorough you were in personally inspecting the property, there are a plethora of problems that are likely to escape the gaze of nonprofessionals. As such, any investor who wants to form the clearest possible picture of where their money is going should insist on pre-purchase inspection.
The results of an inspection can also help you determine how large an offer you should make on a property. For example, if an inspector comes across a host of problems you hadn’t been aware of, consider deducting the combined costs of addressing those issues from your offer. Should the seller be un-amenable to this, it may be in your best interest to set your sights on better-maintained properties.
A well-maintained property in an area with abundant demand for housing stands to bolster your finances considerably. Still, such properties do not represent the bulk of available investment opportunities, and if you make the mistake of assuming that one investment property is as good as any other, you’re likely to find yourself reeling from buyer’s remorse. So, to help ensure that your first investment property isn’t a purchase you regret, take care to brush up on the tenets of an ill-advised investment.
