You have to have a critical eye in order to find investment property that's worth buying. There are some essential things to consider, and we're here to help you understand those things and use them to your advantage.
There's a lot to a home, and an inviting atmosphere at first could give way to a disaster over time. So, if you're looking to invest your money wisely, take a peek at the following tips.
Tips on How to Find Investment Property
We'll focus on 5 key tips to focus on while you're browsing the market. Of course, each property will come with nuances that require additional research, but the following points should serve as a good foundation for your search.
1. Consider the Gross Rent Multiplier
If you're looking to rent out the home, you must first know if it will make you a profit.
The gross rent multiplier (GRM) is determined by a simple equation. Take the cost of the home and divide it by the yearly rent you will charge. So, the equation goes:
(Cost of Home)/(Monthly Rent x 12) = GRM
If you find that the number is lower than 10, it's likely that you won't see a large return. Sure, you can hike up the rent price, but you'd either have to do considerable renovations or risk not finding tenants to pay the amount.
2. Find Growing Markets
Take a look at some of the data of the housing market in the area the house is in. If that area shows a trend toward increasing value, that is an extremely good thing.
Just because a house is nice, doesn't mean that the property value won't plummet in the coming years. You can typically find this data on municipality or government websites from the house's town.
3. Adjust Expectations
The shows on home decor networks often have us believe that a "fixer-upper" is actually a very nice home that just needs a paint job. This is not the case.
You should look at homes with a vision for the future instead of taking them at face value. You might have to do considerable work, but the investment will be worth it over time.
4. Examine Structural Clues
You want to know that the home is in great structural shape. One good way to tell is by looking at the roof.
If the roof is sagging or patchy, you might want to reconsider. The roof is often the first thing to go on a home, and a lot of repairs or additions to the structure of the roof might signify that the home is on its last leg.
5. Look at Your Objectives
At the end of the day, you have a set of qualifiers that you want to see met in the property you buy.
Do your best to keep those boxes ticked, and don't sacrifice if you don't have to. If you're happy with the property, that will give you an edge when it comes to maintaining it, waiting for the value to increase, and feeling confident in your decision.
Need Help with Management?
Owning a property is made exponentially easier with the help of a property management team. One of the reasons to find investment property is to take in a passive income without having to worry too much. Why not get some help?
Explore our site to learn more about property management and the benefit it could have for you and your investment.