February 4, 2019
Investment properties can be a great way to add to your worth and create residual income, but there are many things that should be considered when selecting a property. Not all properties are a wise investment, but with some common sense, a lot of research, and some experience, acquiring properties can be a great way to invest. Let’s look at some things to look for in an investment property.
The location of a property can play a huge factor in whether or not it will make a good investment property. If you are looking for a property to rent then choosing one in an area with a lot of renters is a wise decision. Look for neighborhoods near universities, military bases, or in cities with a lot of businesses that may have commuting positions.
On the other hand, if you are looking to invest in land you may want to look for land in up and coming areas so that you can get more land for less money that will appreciate over the next several years. Whether you plan to develop the land with housing, or just hold onto it until it has a much higher value, be sure to look at the area and whether there is significant growth in businesses and housing.
Most people, whether they are in the industry or not, have heard of housing booms and slumps. When you are considering an investment property you’ll want to pay careful attention to which part of that cycle the market is in. Buying during a boom can cause you to lose money in the long run, with payments that are way too high. Buying in the slump can benefit you if you have the resources to wait it out, but for many investors this isn’t a possibility. The best time to buy is in the time between the slump and the next boom, when demand begins to rise but the steep rise in cost hasn’t caught up.
Initial Investment and Updates
The last thing to consider before investing is the amount of work the property needs. Maybe your plan is to buy a home that needs a considerable amount of work and then flip it for profit. If that is the case make sure to look for properties with renovations you feel confident you can accomplish (yourself if possible). For those who are looking to purchase and rent a property for a profit, you’ll want to look for properties with more minor updates, unless you are very handy and plan to do all renovations yourself.
Additionally you’ll want to consider things like heating and cooling, plumbing, and appliances. If you plan to rent you will be responsible for the upkeep of those things so it is a good idea to look for properties with updated utilities.
Investing in property can be a great way to add to your worth and create an income for yourself over the long term, but there are several things that should be carefully considered. If you are looking to invest in a property and need some help with funding or with determining if a property is a good investment, call us at Maryland Private Mortgage today! We specialize in hard money loans in Maryland as well as other specialized loan types. Give us a call to get started!
The Maryland Private Mortgage Lending Team