• Home
  • About
  • Advertise
  • Contact
  • Policy
  • Guest Post
  • Archive

One Cent At A Time

A Personal finance blog to get rich

  • Email
  • Facebook
  • Pinterest
  • RSS
  • Twitter
  • Beautiful Life
  • Becoming Rich
  • Beginners Guide
  • Extra Income
  • Productivity
  • Saving Money

Key Considerations for Buying Investment Property

March 4, 2023 4 Comments

Share this:

  • Tweet
  • Email

Buying an investment property is an excellent option if you want to build your wealth. However, the most important thing to do before you buy a rental property is to research the market and know what kind of return your rental will produce. In this post, we’ll cover some tips for buying an investment property based on our experiences investing in real estate.

Key Considerations buying an investment property

If we consider investing in an apartment building with several apartments inside – then we know for sure that every single one of those units will always need someone living inside them at all times during business hours (this is called ‘occupancy rate’).

That’s because these types of buildings tend to have high occupancy rates and do not contain rooms requiring special permissions before entering them, such as kitchens/bathrooms, etc.

Hence, everyone has access rights over all areas inside without needing permission first!

Research the neighborhood.

Before you buy an investment property, it’s essential to research the neighborhood. First, consider what kind of lifestyle you want and then look for a property in a neighborhood where you want to live.

The crime rate in an area is one of the most important factors when deciding if it’s safe.

For example, suppose there have been several robberies recently. In that case, this could indicate that there’s more crime going on than usual–and it may not be worth buying there if you’re concerned about your safety or privacy.

You should also consider how long it takes emergency services to respond. This can affect how quickly help arrives at your home in case of an emergency.

Another thing worth researching is schools nearby: how well are they rated? Do they offer any special programs? Consider the school’s rating. Are there good public transportation options nearby, so you don’t need a car?

Find out about the building’s history.

You’ll want to know if there have been any issues with the property and, if so, how they were resolved.

If it has a good history, it will likely continue to be an investment-worthy property.  If it has a bad record or unresolved problems from previous owners/tenants, you should reconsider making an offer on that building.

Calculate your cash flow, expenses, and profit margin.

Calculate your cash flow, expenses, and profit margin.

  • Calculate your cash flow: To calculate your monthly cash flow, you need to know how much rent you can collect monthly and the expenses associated with owning the property (including mortgage payments).
  • Calculate your expenses: The formula for calculating expenses is straightforward: add up all the costs associated with owning a rental property, such as taxes, insurance, and maintenance/repairs. Then subtract this amount from your rental income to find out what’s left over after paying these bills each month if there were no vacancies or vacancies that lasted longer than usual (e.g., if there was an issue with one of the tenants’ credit scores). This gives us our “net operating income” (NOI), representing our profit margin–how much money we’d make per year after accounting for all expenses associated with owning real estate properties like this one!

Get a bank or credit union pre-qualification before looking for an investment property.

A pre-qualification letter is a document that shows you are qualified to buy a property. It’s not a guarantee that you will get the property, but it shows the seller you are serious about buying their home.

You can use this document when negotiating with sellers and agents and offering properties during open houses or auctions.

Be ready to deal with unexpected repairs or upgrades.

Be ready to deal with unexpected repairs or upgrades. You will be responsible for all the repairs and maintenance, so you must have a good idea of what you’re getting into before purchasing an investment property.

You’ll likely have to do some of the work yourself, which can be time-consuming if you have yet to experience doing this! In addition, if there are issues with your investment property (and there will be), they could cost thousands in repairs–and even more, if they’re not fixed immediately.

Make sure your budget can handle these costs before buying an investment property so that when something breaks down on your watch, there won’t be any surprises waiting around the corner!

Plan for contingencies like vacancies leases ending early, or tenants moving out early.

What if your tenant decides to move out early? What if the property gets flooded or the roof needs to be replaced?

You need a contingency plan in place so that if something goes wrong, you’re prepared and can act quickly.

If things go according to plan and everything runs smoothly with your investment property, congratulations!

However, there’s no guarantee that things will always run smoothly–and even if they do, there will still likely be some unexpected challenges along the way.

That’s why it’s essential for investors new at buying investment properties (or any real estate) to have a contingency plan at all times.

Ready to buy an investment property, things to consider before starting.

When you’re ready to buy your first investment property, such as the upcoming Grand Dunman condo, here are some things to consider before jumping in:

  • Location, size, and potential of the property. If a location has good schools, low crime, and easy access to public transportation, it could be an ideal place to put down roots as an owner-occupant or rent out. Also, think about how much money you’ll have left over after paying all of your expenses if you were going to live there yourself. An appraisal will give you a professional opinion on how much value this type of property can bring into the marketplace when selling it later (if that interests you).
  • Research the neighborhood–and find out about building history too! A neighborhood may have been hot five years ago, but now there’s nothing nearby meanwhile, another area might just be starting its climb back up toward prosperity after years of decline.
  • Calculate cash flow potential based on current rents being paid by tenants versus what new ones might pay once they move into these units instead.
  • Get prequalified from banks/credit unions before starting any search process so there won’t be any surprises later on when trying

Conclusion

You can start by researching the market and finding properties that fit your needs. Once you find a property, be sure to have a professional inspect it before making an offer on the house or condo.

You can also ask friends in real estate for recommendations. Professionals will know best how much money you need upfront and how long it will take before earning back any profits.

LIKE THIS POST?
Thank you for subscribing.
Something went wrong.
I agree to have my personal information transfered to MailChimp ( more information )
Join our community of 8000+ subscribers to increase your net worth and build wealth
We hate spam. Your email address will not be sold or shared with anyone else.

Share this:

  • Tweet
  • Email
The tool that changed the way I manage my personal finance - Personal Capital, The Best Free Personal Finance Tool

Want to start a WordPress blog now? The onecentatatime.com blog is hosted by Siteground Web Hosting. For only $3.95 a month, Siteground can help you set up and host your website/blog quickly and easily.

About the Blogger Hi I am SB, a personal finance enthusiast with a career in software development. I am an immigrant to the USA since 2005, after being born and brought up in India. This 40 something technocrat lives and breathes personal finance whenever he gets time from the day job, job as a husband and a dad

Some links on this page may be affiliate links, if you make a purchase following the links, I may earn a commission. Read affiliate disclosure here
« 10 High-Paying Jobs In America That Don’t Require College Degrees
10 Pros And Cons Of Cryptocurrency Investment »

Comments

  1. Kris says

    March 7, 2023 at 3:29 PM

    Getting started with an investment property can feel overwhelming, especially if you’re new to the real estate market. It’s important to do your research and understand the risks and potential benefits before making any decisions. Some key considerations include location, financing options, rental demand, and ongoing maintenance costs. Working with a trusted real estate agent or financial advisor can also provide valuable guidance and support as you navigate the process of acquiring and managing an investment property.

    Reply
  2. Admission Jagran says

    March 16, 2023 at 3:49 PM

    Buying new property is not a cakewalk. All points mentioned in the blog does justice with the readers. It has proper piece of advice and considerations a person should keep in mind while buying a property. Looking for the neighbourhood, knowing about the building’s history and preparing for unexpected repairs, check cash flow etc. all are rational points.

    Reply
  3. Harvey says

    March 23, 2023 at 3:01 PM

    Thanks for the well-thought out article and considerations! The process of buying an investment property is definitely not easy and not as glamorous as it sounds. We had to research 150 properties in the NY region until we found our first investment condo. Also, new investors should understand what’s a reasonable benchmark for their cash-on-cash return and NOI for the given area in relation to the rent.

    Reply
  4. larrynben says

    March 25, 2023 at 10:55 AM

    Purchasing brand-new property is not simple. Every point made in the blog is relevant to the readers. It has proper piece of advice and considerations a person should keep in mind while buying a property. Looking for the neighbourhood, knowing about the building’s history and preparing for unexpected repairs, check cash flow etc. all are rational points.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.



Create your own blog in 20 minutes and $20

Personal Capital, a free tool to change your financial health today

I use and suggest Upstart, for your personal loan need

CreditKarma, a free tool to check your credit scorey

I use Coinbase, for my crypto investments

101 Cents at a Time

101 Ways to Earn Extra Money on the Side
201 Frugal and Perfect Birthday Gifts
101 Ways to Save Money Everyday
101 Ways to be Better and Successful at Work
101 Ways to Save Environment and Energy
101 Frugal and Romantic Anniversary Ideas
101 Low-Cost Men's Fashion Ideas
101 Personal Finance Tips
101 Ways to Reuse Household Stuff
101 Things to Do, When Nothing to Do
101 College Graduation Gift Ideas
100 Tips for Ecommerce Startup
101 Ways to Enjoy Indoor During Winter
101 Ways to Beat Procrastination

Popular Posts

Quick Cash - How to make $100 legally, in a day
Living well on less than $15,000 a Year
Top survey sites for side income
What to do when auto repair goes wrong
Where should I invest my money now?
20 Ways to be productive and happy at work
51 Ways to get out of debt
Be a better person in 15 days, 15 ways
Income ideas for retirees and senior citizens
51 side jobs for college students
Urgently need a large amount of money?
Should I buy or should I rent?
Best Personal loan providers
25 Ways to save environment
25 DIY car repairs to save money
How to decorate office cubicle
How to show your wife you care
50 Financial Rules for Success
51 Frugal weekend family activity ideas
Become Rich By Saving 1 Hour Of Daily Wage
How much do I need to save for retirement?
How to negotiate your salary

Follow us on FaceBook

About Author

SB

Blogger by choice and IT manager by profession. Finance is my passion and gardening is my greatest satisfaction. Born in India, settled in US, Husband and a father. I created this blog in 2011 with a vision to help others. Thanks for your patronage. More info on my "about" page.

View all posts


Subscribe

Join our community of 5000+ subscribers to increase net worth and build wealth

Advertisements

Personal Stories

How I got a new HP computer replaced
Was COVID circulating in USA in fall of 2019?
How my credit score went up 800+
Why I didn’t invest in Bitcoins
How I controlled impulses to buy things
Why this blog is named One Cent at a Time

Subscribe via Email

Site Disclaimer

Disclosure of Material Connection: Some of the links in this web site are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
Read full Affiliate disclosure


One Cent at a Time is published by SB. The opinions expressed herein by him are his own and not those of his employer or anyone else. All content on One Cent at a Time is for entertainment purposes only. By reading this blog, you agree that SB and/or One Cent at a Time is not responsible for any actions taken after reading this blog. For the full disclaimer, click here .

Major Media Mention

One Cent at a Time Media Appearances

Copyright © 2023 One Cent At A Time · Designed by Nuts and Bolts Media