If you’re looking for information on how to invest in homes, you’ve come to the right place. From what to look for in an investment property to which renovations to make, we’ve rounded up everything you need to know about investing in residential real estate.
With everything going on in the world, the real estate market is quickly breaking records. If you’re looking to get in on the high demand for homes and rentals, we’re here to help. Think of this as your beginner’s guide to property investment.
Looking for Investment Properties
Before you start shopping for real estate, you want to make sure you’re buying a home that’s a good investment. This is where a local investment company can give you some much-needed peace of mind. Read more now about the properties they have available to purchase today.
Homes that have been inspected and purchased as a foreclosure offer a unique opportunity to make money reselling them. With the current state of the housing market, it’s tough to find a property that’s affordable enough to renovate. Bank-owned or foreclosed homes offer you a chance to buy a home at a discount.
Buying a distressed property also gives you more money to make repairs. When you start house hunting, consider how much work a property needs. If the answer is a lot, take a look at the surrounding area. In many neighborhoods, other houses in the area have already been renovated.
If neighboring homes are remodeled and have sold or rented for more, you know you’re making a great investment. Do a little homework before you start looking for properties and you’ll feel more comfortable making an informed decision.
Getting Your Financials in Order
Before you start looking for an investment property, it’s helpful to have all your financial information in order. Will you get financing for a property or will you pay in cash? If you’re financing a home, you’ll want to gather your basic information before you apply for a loan.
You’ll likely also need to show your income tax returns as well as income verification. The more information you have upfront, the easier the application process will go. Consider how much you want to put down, how much you want to pay for the home, and how much work you need to put into the property.
How Will You Use Your Investment Property?
In other cases, you may want to renovate a property and keep it as a rental. This can be in a single-family or multi-family home. With a multi-family home, you have the chance to renovate and rent more than one unit.
Some homes are great for short-term rentals. You can rent these out at a premium on a month-to-month basis or even as a vacation rental. How you plan to use the property will help you narrow down your search.
Take a look at rents in the area and see how much you’re able to charge. Your target rent will also help you plan for what renovations and updates to make.
Setting a Budget
Whether you’re flipping a home or renovating a rental, setting a budget is key. Not only do you want to set a purchase price budget, but you also need to factor in the cost of renovations. Renovations can range from a full gut rehab to a minor update.
Before you buy your property keep this renovation budget in mind. You want to make sure after your renovations are done, you’re still able to make a profit. Overspending upfront could mean less money for renovations and unforeseen expenses.
It’s also helpful to know your target rent. If you’re keeping the property, your rent will become part of your income. This can help pay for operating expenses and your mortgage if you have one. The more rent you can command, the more profits you’ll see each month.
Where to Spend Your Money
While most distressed properties need some work, it’s important not to overspend on updates and renovations. Not all updates actually boost your property value or give you a good return on your investment.
Paint can go a long way in an investment property. Adding new paint to the walls and even panting kitchen cabinets can save you a lot of money. Just a little paint can completely transform a space.
When you’re fully renovating a home, always keep extra money aside for emergencies. In older, foreclosed homes, there’s almost always a hidden expense lurking.
Tips for Generating Income or Getting Your Home Sold Quickly
Whether you’re looking to sell or rent your home, there are a few easy things you can do to help it get off the market sooner. To start, make your home as move-in ready as possible.
A clean, freshly updated home will always rent or sell quicker than a home in disarray. Even if you’re only spending a few thousand dollars to freshen up a home, the smallest updates will go a long way.
Consider new flooring, paint, updated fixtures, and mechanicals to give the home a fresh, updated, and safe, new look. As a landlord, you want to make sure your home is a safe place for people to live. Investing money to make your home safer is always money well spent.
Inexpensive updates include new carpeting, new hardware, new faucets, and updated countertops. These small updates will have a big impact when it comes to your sales price or monthly rent.
How to Invest in Homes 101
When you’re just starting out, knowing how to invest in homes can seem overwhelming. With the right team of real estate professionals and contractors, you’ll quickly learn how profitable real estate investing can be.
From flipping a home to sell or renovating a rental, real estate provides a great opportunity to grow your investment portfolio. For more real estate and home design tips, check out the lifestyle section.