When buying an investment property, it’s up to you to do your due diligence to make sure you’re making a sound investment. Considering the magnitude of this purchase and how it will impact your long-term wealth-building, you want to be certain that you’re making the right decision about which property to purchase. Here are the six tips that you need to heed in order to ensure that you don’t get fleeced.
#1 Find The Right Property At The Right Price
Snagging the lowest price you can possibly pay is a key component to buying the right property in Oregon or Washington. After all, the price you pay to obtain a property will have a direct impact on your profits.
You don’t want to buy a home that will cost you more than what you can make off it. This is especially true if you plan to fix and flip the property as opposed to holding on to it and renting it out.
Yes, finding the right property at the right price is a whole lot easier said than done. However, it’s not impossible. All it takes is some patience and research.
You have to determine what everything in your area is selling for in order to be able to spot a bargain! Further, you need to know that various property classes will outperform each other. For example, land and home units will appreciate differently.
This is where working with an experienced local real estate agent comes in handy. These professionals will be able to help you spot a good deal on a property and can help you negotiate a lower price where possible.
#2 Figure Out The Cash Flow
It’s always a good idea that you know how to maintain your mortgage repayment obligations over the long term. This is especially important if you plan to hold the property as a rental.
It’s recommended that you analyze the cost of servicing any loan only on an after-tax basis. By taking this approach, you have the power to calculate and put the cost into actual terms that make sense for you.
Crunching the numbers beforehand will give you the chance to determine what your cash flow will be after all expenses will be covered, and will tell you if you’re in danger of being in the red.
#3 Look For A Good Property Manager
Managing an investment property in Colorado and Idaho takes a lot of time and effort. It can be even more cumbersome if you live far away from the property or have multiple investment properties on the go. In this case, managing yourself can stretch you a bit too far. But a property manager can help take that job off your hands.
A property manager will take care of managing your investment property for you, such as finding and screening tenants, dealing with tenant disputes, collecting rent payments, taking care maintenance, and making necessary repairs. But in exchange for this service, property managers come with a cost, so be sure to weigh the cost of hiring a property manager against your cash flow.
Finding a good property manager who is a professional in his or her field is vital. Your property manager’s job will be to make certain that everything is in order between you and any of your tenants. A good property manager can extract the best possible value for you from your Seattle or Boise property and help to keep your tenants in line as well.
#4 Choose The Appropriate Type Of Mortgage
There are many options available for financing the investment property that you choose, so it’s best to get sound advice. Options such as a variable rate loan and a fixed-rate loan are both popular choices, but your specific circumstances will dictate what’s most suitable for you.
Consider that variable rates often end up being cheaper over time, yet fixed rates at the right time are ideal. Work closely with a trusted mortgage company to help you decide which mortgage program is best for you.
#5 Take Equity From Another Property
Leverage the equity from your residence or another investment property. Doing this is actually an ideal way to purchase your investment property. Equity can be calculated by way of calculating any difference between what you owe on your mortgage and the overall value of your property.
By using the equity from another property, you may not have to take out as big of a loan to finance the investment property purchase. Plus, you may find it easier to get approved for a mortgage may be able to snag a lower rate at the same time.
#6 Comprehend Both The Market And Dynamics When Buying
When making a decision to buy a rental property it is advisable to focus on a specific area to research before pulling the trigger on making an offer. Research the local economy and get a feel for the different neighborhoods. Are the fundamentals of the job market strong? Is there a lot of new construction? How much buildable land is in the area? Once you’ve determined that you want to purchase a long-term investment in a specific area it’s time to compare properties and get a feel for home prices.
It’s best to take time and analyze properties that are available in the area within your chosen price range when looking at an investment property in places like Denver or Portland. The more homes you see the better idea you’ll have if a specific property is priced well or not. It’s very advisable to actually talk to both local people and real estate agents in the neighborhood. They can give you hints on small, yet vital, things like which side of a street is considered more desirable.
These are the six tips to help make sure that you don’t ever get fleeced when buying an investment property. They can make the difference between purchasing a great property that has a high return on investment and purchasing a lemon.
Call your trusted mortgage professional today for some answers and more information.
Ready to Apply For a Mortgage in WA, OR, CO, or ID?
Do you have questions about home loans? Are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest. Contact us today with any questions you have about mortgages.