Tips for Buying Investment Properties – Part II
When purchasing investment properties, there are several things you need to consider in order to be successful. These include where to purchase the property, who to manage your properties or who to rent to. The following are tips that will help you buy investment properties like an experienced professional.
Seek professional advice
As you start out in property investment, it is important to seek professional advice. To determine the value of foreclosure homes, cheap homes, wholesale homes, handyman specials or repossessed homes, you need to consult a realtor. Other professionals would include home inspectors to estimate rehab costs and handle repair issues, real estate appraisers to provide home value estimates, property managers to advice on handling eviction and collecting rents, property insurance agents to handle insurance issues, and seasoned property investors to advice on how to determine rental values. Surround yourself with many professionals and apply their expert advice while purchasing an investment property.
Secure financing
You need to secure financing for purchasing an investment property. Most new investors can’t access the large amounts of capital needed to purchase their properties. However, you don’t really need money to venture into property investment. Like many experienced investors, you could finance your deals using other people’s money. Nowadays, banking institutions have very strict lending standards and are cautious about whom they finance. Therefore, you will need to exercise diligence in managing and monitoring your credit score so as to increase your chances of getting bank financing. The other option to finding financing is to use private lenders or hard money. All these methods will help you secure financing for investment properties.
Make a sizable deposit
Though it is a great idea to secure financing, it is advisable to put down a good deposit on an investment property. Many seasoned investors make a down payment of at least 20%. If you are in a position to pay more, that is also advisable. It is possible to buy an investment property with no down payment. However, you will later be required to pay private mortgage insurance (PMI).
Get a thorough inspection
For inspection, you will need to work with a home inspector. A proper inspection will address defective building materials, structural impairments and building code issues. All these will affect the profitability of the property. Failing to get an accurate and through inspection could be detrimental, resulting in wasted money, effort and time. Therefore, don’t buy any investment property before inspection.
Refine your negotiation skills
To get investment properties at a good bargain, you need to refine your negotiation skills. You can learn about negotiation by reading books and listening to audio lessons. Attend seminars and forums where you can interact with like-minded people. During the actual negotiation, it is always advisable to let the seller quote his price first. You can then make a relatively low offer. Unless you are able to negotiate low prices, you are unlikely to succeed in the investment property business. However, how you negotiate will vary depending on who is selling. You will handle negotiation differently when purchasing property from a bank than when buying from individual sellers.
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Stephan is a freelance writer, who often writes about investment property and cheap houses .
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