Finding a profitable investment property can be difficult. There are many things to consider when deciding where you want to invest your money, and it’s not always easy to find the perfect match.
However, there are a few ways that you can go about finding properties that will yield higher returns than others — which is what we’re all looking for. In this blog post, we share some of the best tips on finding a lucrative investment property.
Know About Your Market
The first thing you need to do is get a good feel for the market in your area. You want to ensure that you’re investing where property values are rising, not decreasing or stagnant.
Talk to a local property management company about what properties might be profitable. These professionals will offer advice that is specific to your market. They also have access to the best real estate properties in that area and help you find what is right.
Who Is Your Ideal Renter?
Knowing who you want to rent your property can help narrow down where the best investment properties are for you.
If you’re looking for a retiree, then you might be interested in condos near golf courses or retirement communities. If you’re investing in property that is near a university, then young students might be the ideal renter for it.
By purchasing an ideal property for your renter, you can increase the chances of a profitable investment. You also make it easy to get to know your renters and their needs.
Estimate the Rental Earnings
Numbers are everything in real estate investment.
Estimating rental earnings is the easiest way to judge if a rental property will be profitable or not. Divide the annual mortgage by 12 and subtract it from your desired monthly rental collection. This gives you an estimate of how much money can be made each month in rent on that property.
Be realistic about this estimation as other costs are associated with owning investment properties, such as property taxes and maintenance.
A good rule of thumb is to invest in properties that return a monthly rate of at least 2% higher than the mortgage interest rates on your investment. For instance, if you’re paying 5% for a mortgage, your rent should be at least 7% percent per month. The goal is to have positive cash flow from this investment.
Consider Appreciation of the Investment Property
How much is the property worth now? This will give you an idea of what your investment may be valued at in one year. This value should factor into how much rent you can charge for that property.
There are two types of appreciation. One is a natural appreciation that occurs in response to the property’s increased value. The other comes from investments you may make into the property, such as landscaping and pest control.
The bottom line is, property investment should guarantee you cash flow even as its value appreciates.
Get Yourself a Worthy Investment Property
With the right amount of planning and research, anyone can find a profitable investment property. It may take some time and patience, but you’ll land a worthy investment.
We hope this article has given you some ideas on how to start finding properties that are worthy investments for yourself or others. To read more interesting articles, keep visiting our blog.