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How to choose the right investment property

Property in Tampa, FL

In a 2019 Gallup poll, more Americans said that investment property is a better long-term investment option that stocks (35% vs. 27%).

The advantages are clear:

  • Investment property is more stable than the stock market
  • Investment property generates passive income
  • Investment property secures your future – when you retire, for example
  • You can draw on the equity of your investment property for the down payment on your next property
  • You can always opt to move into your investment property by choice or circumstance

In order to reap these benefits, however, you need to make sure that the investment property you choose is the right one.

Here are helpful tips on how to pick the perfect investment property.

Tip #1: Set your real estate investing goals

As an investor, it’s important to know what your real estate investing goals are. It will help you identify the type of investment property that you need, whether it’s a condominium or a commercial property. Knowing these goals can also help you determine exactly what you want from your real estate investment.

If you’re having trouble figuring out your real estate investment goals, here are a few questions to help you out:

  • Are you investing for short-term or for the long-term?
  • How long do you plan to hold on to the property?
  • How leveraged will your portfolio be?
  • Are you buying a property to protect your wealth?
  • What is your investment timeline?

Tip #2: Consider the location

The location, in particular, is one aspect that you should pay attention to. A great location can make or break an investment property. However, the ideal location also depends on your real estate investing goals. If you’re on the lookout for commercial properties, you want to make sure that it is centrally located and easily accessible.

When it comes to residential real estate, determine the property that you plan to invest in. If you’re thinking about buying a condominium, a prime location near commercial areas is most ideal. Waterfront or beachfront properties, on the other hand, are higher in value when they come with great views of the water.

Tip #3: Research, research, research

Research is essential when it comes to finding the right investment property. This ensures that you’re making an informed decision before going through with the purchase. It also gives you an idea of its potential as an investment.

When researching, find out more about the potential neighborhood or community. Whether you’re investing in a residential or commercial property, the neighborhood plays an important role in your investment. How accessible is it to highways and other main roads? You can even drive around the area to get a feel of the neighborhood during the day and night.

Another way to research is by learning about the local development plans in the neighborhood or community. The future plans of the community, whether it’s a commercial development, a school, or a hospital, can affect the property values and desirability of the community. Knowing this will be a huge help in your investment decisions.

Tip #4: Take a look at local selling and rental prices

A part of your research includes checking the recently sold properties in your area and how much they sold for. Doing this gives you an idea of your potential property’s value and how much its value can increase.

And if you do plan on renting out your property, look for similar homes that are being rented out and check the average rental price. You can adjust your rates accordingly.

Tip #5: Consider the expenses

As a future investment property owner, there are certain costs that you have to consider. These include property taxes, insurance, and operating costs such as property maintenance, repairs, and utilities. Once you know the costs of owning a particular investment property, including its maintenance, you may want to consider other options like low-maintenance properties to save on costs, or hiring a property manager to save you time.

Tip #6: Calculate your expected return

If you want an estimate on how much money or profit you can make on your investment, it’s important to calculate your expected return. The ROI for a rental property, for example, can be determined by subtracting the original cost of the investment from the expected total return on investment. This estimated net profit will then be divided by the original cost of the investment.

Tip #7: Check out multiple properties

It always helps to have a wide variety of options before making a decision. You can evaluate which investment property works best for you in terms of location, cost, maintenance, expenses, and risk.

Start your Tampa real estate investment journey with Viewpoint Realty International today. We are your go-to real estate experts for the purchase of commercial and investment properties. Get in touch with us today at 727.584.7355 or send an email to viewpointrealtyinternational(at)gmail(dotted)com. Feel free to send us a message here.