Buying your first investment property can be intimidating, especially if you aren’t sure where to begin. You want to find a trustworthy source to have all of your questions answered. Maybe you need some guidance from the financial aspect of it. This guide on how to buy your first investment property will answer your questions and get you heading in the right direction.
How to buy your first investment property
For starters, you’ll need to determine which type of property you’re wanting. You could purchase a residential property or a commercial property. Are you more interested in single-family homes or multi-unit properties? If short-term vacation rentals or even apartment buildings and duplexes seem appealing to you, a residential investment property might be the right direction for you. If you’re more interested in office spaces, retail spaces, or others of that sort, then a commercial property would be your best bet. Once you’ve determined the type of property you’re interested in, you’ll want to think through these questions.
Questions to ask yourself before buying your first investment property
Whether you’re looking to generate some additional income or you’re wanting to expand your portfolio, investment properties can be a huge benefit. You’ll want to find a trusted financial advisor to work with through this process, along with a realtor. By working with different partners, you’ll be able to ensure you’re taking into consideration all variable factors in purchasing an investment property. That information, along with the answers to the following questions will get you set up to successfully purchase your first investment property.
What costs and mortgage options should I be prepared for?
Once you have an idea of the type of investment property you’d like to buy, you’ll want to work with a real estate agent that has experience in investment property sales in the specific area, commercial or residential, that you’re interested in. You’ll also need a lender to help you get preapproved for the mortgage. You’ll need to have a good idea of your intended down payment and your bottom line. Having this information beforehand will help with finding the right property that fits in your approved mortgage budget.
Something else to consider before you sign on the dotted line is the amount you’ll need to make to cover any anticipated expenses on the property. You’ll be able to talk with your real estate agent and financial advisor to get a good idea on the property taxes. It would be a good idea to go ahead and plan for property maintenance like initial and ongoing landscaping, appliance repair, and appliance replacement. Depending on the type of property you’re purchasing, you’ll need to cover HOA fees and parking fees. It never hurts to do additional research on the area and community (if your property is residential) to cover any additional costs versus pushing it on to your tenants. While commercial properties won’t have all of the same additional costs, you can still expect to have to cover appliance and machine repairs and maintenance along with landscaping.
How do I know if the property is right for me?
Aside from the cost, which is a major contributing factor, you’ll want to take into account location, the current state of the property, and what your long-term goals are. Researching prices for both residential and commercial properties in a few different areas is a good place to start. Working with a real estate agent from the area will give you access to historical data as well as real-time information specific to properties you’re interested in.
Depending on your skill set, consider properties in different classes. From luxury properties to locations in less-desirable areas, you’ll have options based on how much you can invest initially and long term. For example, at a luxury property, you’ll need to maintain the standard that tenants expect but you shouldn’t have a hard time finding well-equipped tenants. On the flip side, in a less-desirable area, you may have a hard time finding consistent tenants but your maintenance cost may be significantly less.
You will want to plan to have an inspection done on the property regardless of the class or location. This report will give you an idea of repairs that are immediate and repairs that could be coming along the way. A full report on the plumbing, roof, and any other major parts of the property to help with long-term planning for any necessary repairs.
Should I hire a property management company?
Sometimes managing an investment property, that you are also renting out to tenants, can be overwhelming especially if it is your first investment property. Working with a property management company can alleviate some of the stress you might face. At Quartermaster Properties, we’ll treat your property like our own. If you’ve got tenants, we’ll make sure they have access to a secure owners portal giving them plenty of resources whenever they need it. We also take care of inspections and property market analysis so you don’t have to. Along with many other perks of working with our team, you’ll have confidence that your property is well taken care of while having someone in your corner whenever you need the support.
Are you ready to buy your first investment property?
While buying your first investment property can be daunting, there are plenty of resources available to help with the process. Learning how to buy your first investment property is about taking the right steps and being prepared for various outcomes. Determining what type of property you’re interested in will help you determine the next steps in realistic cost and mortgage options. With a property management company on your side, like Quartermaster Properties, you’ll be prepared for anything.
Whether you’re in the Upstate of South Carolina, the Lowcountry, or somewhere in between, we can help. Contact our team today to begin the conversation on acquiring your first investment property and learn how we can help.
