When you buy an investment property, it should always be on top of your mind that this is not the dream house that you are going to live in but a business investment. It should therefore be considered in the light of any investment where you would expect the best possible returns. You should therefore consider properties through the eyes of potential tenants to ensure that you make it as attractive for them as possible.
To start with, you must do your homework and research promising properties and the neighborhood in which they are located as thoroughly as you can. Get information about capital appreciation in the neighborhood and the kind of rents that you can expect to receive. A real estate agent who is familiar with the neighborhood can help you to get access to the information. It is important to select a neighborhood that will appeal to potential tenants because it is conveniently located amongst facilities such as schools, transportation and shopping. If you are considering a unit in a managed property, the managing agent to provide you with a complete background in return for a small fee.
Get a proper inspection done by a professional. It will cost you some money but save you money in the long run. You would get an accurate idea of how much you need to spend on repairs and whether the property is worth the expense. You will also get a handle on how much you should pay for the property. In addition to the inspection, inspect the property yourself several times at different times of the day and different days of the week to judge things like traffic and noise. A rainy day would be ideal to check for leaks and water seepage.
If you are negotiating for a price, you would naturally want the lowest possible price while the seller would want the highest. Generally speaking, the price can be settled somewhere in between. You should also make sure that the rent that you can expect to receive should meet the hurdle rate of return on your investment. If you are planning to buy the property at auction, do your homework by visiting several auctions and familiarizing yourself with the procedures. Get your financial resources in order and be prepared to provide written documentation that demonstrates your capability to pay. If you are borrowing the money, check out your options to select the most attractive loans. Get preapproved for your loan option so that you can demonstrate your ability to pay for the auction property.
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