Investors who want to buy their first rental property or add to their portfolio need to know what type of property to buy and where to buy it. This is a big commitment and investors should understand the pitfalls of investing before making any decision. A property’s location will ultimately decide the success or failure of your investment. When I am buying a property, I look at a few specific things. We’re discussing those today.
Local Economy and Rental Market
The economy of an area is just as important as the value of the property. Take a look at the types of jobs that exist and are being created in the area. You need to know if these jobs are likely to be outsourced, which would result in high unemployment. A property investment is a large asset. You need to look at it as a five, 10, or even 15-year process. You will not get rich flipping an investment property. So, know the economic outlook for the area. You don’t want to be stuck in a situation where you’re banking on a certain rent roll and then the jobs disappear and low rents become normal. That will give you only half or a third of the ROI that you anticipate.
Consider Your Investment Goals
What are you looking for with your investment? If appreciation is the most important thing to you, consider a higher class property. Your cash flow might not be as great, but if the area is up and coming, you might be cashing out at a higher rate later, when you sell. You’ll earn more profit than you would if you are concerned more with immediate cash flow.
Go into an investment purchase with your eyes open. Don’t get distracted by the actual property. Know what the property will do for you as an investment vehicle. That’s the key point.
If you have an interest in investing in Manatee or Sarasota counties in Florida, please contact us at Gulf Coast Property Management. We’d be happy to help you with some clear, objective advice for your next steps.