In­vest­ment prop­er­ties

Know what to look for

The Covington News - - SHOWCASE OF HOMES -

While the in­vest­ment game is never a sure thing, one of the most solid in­vest­ments a per­son can make is real es­tate. As the old say­ing goes, “God’s not mak­ing any more land, so the price is only go­ing to go up.”

But if the real es­tate game were that easy, ev­ery­one would be a mil­lion­aire. Be­cause of the ex­pen­sive na­ture of real es­tate and the un­easi­ness many peo­ple feel when they de­cide to in­vest in it, con­sider the fol­low­ing tips be­fore tak­ing the plunge.

• Look for the right lo­ca­tion. It’s al­ways im­por­tant to re­mem­ber that buy­ing an in­vest­ment prop­erty isn’t the same as buy­ing a home you’re go­ing to live in. But some of the same rules ap­ply. One such rule is lo­ca­tion. While those look­ing for their own home will likely look at pri­vacy, the lo­cal school sys­tem and other things, when buy­ing an in­vest­ment prop­erty it’s best to look in a high traf­fic area that’s close to pub­lic trans­porta­tion. The high traf­fic means more prospec­tive renters will see your “For Rent” signs, while ac­ces­si­bil­ity to pub­lic trans­porta­tion will in­crease your pool of po­ten­tial ten­ants.

In ad­di­tion, it goes with­out say­ing that a de­sir­able lo­cale can of­ten rent a place on its own. Rental prop­er­ties in trendy neigh­bor­hoods of­ten rent the fastest and land­lords can of­ten charge more for less.

• Look for low-main­te­nance prop­er­ties. Th­ese days, the prac­tice of “flip­ping” houses is more pop­u­lar than ever be­fore. Those who are just start­ing out in­vest­ing in real es­tate, how­ever, should avoid this approach and all high- main­te­nance prop­er­ties. Flip­ping a house re­quires sub­stan­tial cap­i­tal to turn a profit, as you’ll need to do lots of main­te­nance be­fore you can rent or sell the prop­erty. If you’re just be­gin­ning to in­vest in real es­tate, you’ll want a low-main­te­nance prop­erty that will be­gin turn­ing a profit more quickly than a prop­erty that will need lots of re­pairs.

• In­quire about the prop­erty’s rental his­tory. If you’re buy­ing a prop­erty with mul­ti­ple apart­ments, ex­am­ine the prop­erty’s rental his­tory. If the cur­rent ten­ants are good with their pay­ments, this will ease your tran­si­tion to be­com­ing a land­lord. If cur­rent and past ten­ants were con­sis­tently late pay­ing rent, this might tell you some­thing not only about those ten­ants, but the neigh­bor­hood as well. Good neigh­bor­hoods don’t need to beg for ten­ants, and there­fore land­lords don’t have to put up with ten­ants who don’t pay on time. If the prop­erty has a his­tory of ten­ants who pay late, this might be in­dica­tive of a neigh­bor­hood where peo­ple don’t want to live, and there­fore land­lords might have to ac­cept less de­sir­able ten­ants who can­not pay on time.

• Speak with lo­cal of­fi­cials about codes and zon­ing. Land­lords who have owned a prop­erty for sev­eral years of­ten get away with things that new land­lords won’t get away with. This can in­clude prob­lems with zon­ing or fire codes. Be sure to ask lo­cal of­fi­cials about a prop­erty be­fore sign­ing on the dot­ted line.

• Look for a newer build­ing. Par­tic­u­larly for first-time in­vestors, it’s al­ways best to look for a newer build­ing. While an ex­act age is ar­bi­trary, try and find a build­ing that’s less than 30 years old. Older build­ings re­quire more main­te­nance, and if you’re new to real es­tate, you might not be skilled at main­te­nance your­self of know of a qual­i­fied handy­man to act as your su­per. Plus, older build­ings, while they of­ten have more char­ac­ter, are less de­sir­able to prospec­tive ten­ants and are of­ten harder to fill than newer build­ings.

• Look for sell­ers who aren’t in-state. A big part of buy­ing real es­tate, whether it’s prop­erty you plan to live in or rent out, is ne­go­ti­at­ing. When buy­ing an in­vest­ment prop­erty, you can of­ten gain the up­per hand if you’re buy­ing a prop­erty from an owner who doesn’t live in the state where the prop­erty is lo­cated. Such own­ers of­ten pre­fer sell­ing quickly and min­i­miz­ing headaches over get­ting the best price.

Metro Creative Ser­vices

On the lookout: newer build­ings.

Those new to the real es­tate in­vest­ment game would be wise to look for

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