Getting into the world of real estate investing is really fun and can be insanely rewarding, but if you’re new to the scene or you’ve only worked with a couple of properties, there are still things that you might not know to look out for.
That’s what we’re aiming to help you with here.
Get that home inspected!
When you’re getting into investing, there’s a super high chance that you’re going to be working with a property that needs some work. Sometimes the amount of work needed can be staggering, and you can be spending tens of thousands of dollars restoring a home. The challenge with a project home like this is that there can be a lot of different issues that don’t yet have any symptoms. The only real way to know for sure is to get the home inspected.
Whether a house is being purchased for a family or for an investment, it’s always worth getting a professional inspection done. There are a number of Houston home inspectors to choose from, and most of them have very competitive pricing, which is around $300-350. Spending a few hundred bucks to make sure that there aren’t any hidden problems that can come back to bite you in the ass is incredibly useful and affordable. A wiring or foundation issue that you missed because you were trying to save a few hundred bucks might come back and cost you several thousand.
Another thing to keep in mind is insurance. While you’re working on a property, you want to make sure there’s plenty of coverage, especially when you’ve got sub-contractors working in it.
The most important coverage, however, is if you’re using the property as a rental. You need to make sure you have liability insurance in place in case anything every happens with a tenant or a guest. And home warranty will cover any major appliance breakdowns that can occur while you’re renting out the property. Maintenance should be factored into your financial projections for the rental, but there are always circumstances that extend beyond your projections, so mitigating those costs will be very beneficial.
When you are looking at potential properties to purchase, make sure you do extensive research on their locations. You don’t want to buy a great piece of property, only to learn it’s in an undesirable location or an unsafe location because it will be hard to rent it out or resell it at a higher price. Not only do you want to do research online, but you want to actually go to the locations and see them in person.
Type of Property
Let’s not forget to mention you want to look out for the type of properties you are browsing. For example, a condo in a desirable location will likely be more profitable than an apartment building that is in excellent condition, has many units and is selling for dirty cheap, but located in a horrible location. However, an apartment building will generate far more profit in the same location that the condo is in. When it comes to investment properties, location and the type of place it is matters.
Buying investment property is a major undertaking, and you want to know what to look out for. The above are only a few things to look out for. With that said, all you have to do now is keep the above info in mind and start looking at investment properties to buy.
If you’d like to learn more about real estate investors and the effects they have on our Houston community, check out our article about The Saviors of Behind The Scene: Real Estate Investors. Alternatively, we have a quick start article about getting started in wholesaling here: How To Get Started In Wholesaling.