A recent survey showed that 31% of Americans choose investment property, while only 20% prefer stocks. An improving real estate market in many parts of the country provides an excellent opportunity for several types of investment property.
Yet, if you don’t know where to begin, you will need investment property advice to put you on the right track. If you want to diversify your portfolio with the best investment property in Colorado Springs, this brief guide will help you with five factors to consider. So keep reading to learn how to buy investment property with confidence.
1. Learn Investment Property Makes Money
There are four distinct benefits to owning an investment property. First, the equity you have in owning a property will increase your cash flow. Of course, your equity increases as your tenants pay down your mortgage.
Third, when buying wisely with sound investment property advice, you can expect to see a profit from the increase in the property’s value. Last, there is also a tax benefit in an investment property. Finally, expenses and implied depreciation from the building’s age can work in your favor.
2. Understand the Costs
Expenses play a significant role in choosing the best investment property. Even with a tenant paying the cost of your mortgage, you can expect there will be repair and maintenance costs.
It’s also critical to learn the local taxation rates for owning real estate. If your investment property is part of a condominium, you must factor the HOA costs into your expenses. Think about property insurance and other fixed costs before buying.
Yet, you also have to allow for periods when your investment property will go unoccupied. Tenants will come and go, and there will be times when the property lays dormant.
3. Know What to Look For
Location is the critical element for learning how to buy investment property. Understand your goal for the property before looking. If you plan to buy a vacation rental, get investment property tips on where people travel.
If you expect to rent your investment property for most of the year, look for areas where people need to rent. For example, an investment property near a college will attract students who want to live off-campus.
4. Understand the Risks
No matter what types of investment property you search for, each comes with an expected variation of risks. It’s crucial to prepare for changes in the tax rate and the market where you buy.
Choosing the wrong tenants can prove costly with downtime and expensive repairs. Therefore, it’s best to anticipate all the future factors that could create challenges.
5. Use Management Professionals
Consider whether your schedule can handle the time involved in buying an investment property. If your business demands more of your time, it’s best to hire professional property management services.
Companies that manage locations for investors understand all the factors with tenants. A management service will maintain the quality of your property and ensure tenants comply with your guidelines. For example, pets are a significant concern for many investment property owners.
Get Investment Property Advice
Owning an investment property can become a significant piece of your growing portfolio. So approach the process with help from experts in the industry.
Hopefully, these investment property tips gave you a positive start on your journey to owning an investment property. If you would like to learn more about the value of having a management service on your side in Colorado Springs, contact us today.