What every buyer should know before buying investment property:
Choose your tenants first:
- If you don't want to deal with low income tenants or student rentals, then buy more expensive, more upscale rental property.
Before you go looking, decide what kind of repairs you can do yourself and what you'd have to contract out and have a good idea of what this would cost before you buy:
- If you find a property that really needs a lot of work before renting it out, you'll need to be prepared to be able to support the building for a while as you spend the time doing the repairs.
Do you want a lot of cash flow but maybe not much appreciation?
- This is probably low income tenants, or a student rental.
Do you want appreciation and not much cash flow?
- This is probably professionals or a corporate rental.
Do you want to fix up and resell and not deal with tenants at all?
- When you do this, find an up and coming neighborhood, a medium price point and be sure you know what the market wants for a quick sale. There is no point in putting in a new furnace when the buyer is happy with a home warranty but really wants granite counter tops to show off to their friends. The higher the price, obviously the smaller the market and the more carrying costs involved.
- Talk to your accountant about the tax implications of reselling property in a short period of time and know the in and out costs of buying, fixing up, and reselling property.
Talk to your accountant about the tax implications or advantages of holding property for rental
Talk to your insurance adviser about insurance costs of rental property and insurance liability coverage
Talk to your mortgage lender about the costs of loans on investment propertyand how to get the most Fannie Mae loans rather than the commercial loans.
- Find out if you can reduce the interest rate by putting 25% down from an equity line on another property
Find a realtor that specializes in investment property, that lists this sort of product on a regular basis, and who can teach you what you need to know.
If you are loyal to a realtor who you believe has your best interests at heart, they will call you when they list something that you'd be interested in and you'll get a head start on the competition
Please call 513.766.9200 and ask for The Meadows Team if you have any questions. You can also email meadowsteam@meadowsteam.com. We're here to help!
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