How to Avoid Investment Home Purchase Mistakes

An investment home purchase is a big step in your financial life. During this process, it is important to avoid making any mistakes when you purchase a home. Here are a few things to consider about how to avoid making a mistake when purchasing an investment home.

Consider the Area

The old saying about "location, location, location" in real estate has some truth to it. When looking at purchasing an investment property, you should take great care in choosing the proper location. If you are planning to resell the house, it will be much easier to sell if you are in a good location. If you are planning on renting the property, you also want to it to be in a desirable location. It should be located close to places that renters will prefer such as shopping, parks, and schools.

Order Your Own Inspection

When looking at a potential property, you need to be sure to arrange your own inspection of the property. You want to be able to determine if there are any legitimate problems with the property. Some sellers will not disclose potential problems in an attempt to unload the property. Therefore, you can avoid taking on any large problems by hiring a building inspector to look at the property. If you decide to make an offer, make sure that the offer is contingent upon the house passing inspection.

Avoid Major Repairs

Many people like to take on houses that need a lot of work in order to be usable again. While this strategy can work in some cases, many times it will lead to spending much more money than you wanted to. In most cases, you should try to stick to cosmetic repairs with the house. For example, you can easily change the carpet, paint the walls, or install the cabinets. However, if there are foundation issues, a leaking roof, or other big problems, you might want to stay away.

Do Not Overpay

Many investors make the mistake of overpaying for an investment property. They fall in love with a particular property and then pay more than they should for it. Do not allow this to happen to you. If you are planning on getting a property for investment purposes, you want to find one that is priced below market value. There are plenty of deals out there to be had, and you do not need to tie yourself down to an overpriced property. Good investors know that the money is made on the front end of a deal. If you pay too much for the property, you will not be able to improve it enough to be able to make a significant return. 

Consider Maintenance

When looking at investment properties, you might want to consider getting homes that have low-maintenance features. It can be costly and time-consuming to maintain an investment property. Therefore, look for low-maintenance features such as vinyl siding or ceramic tile.

blog comments powered by Disqus