Investment Properties – 101
Purchasing investment property is easy…on paper. However, in the ever changing Tucson Real Estate market, investment properties can be extremely difficult. Fortunately, you have found The Vanguard Group. We have professionals on our team that are actually avid investors with experience in all types of investment properties.
Here are a few tips to consider when purchasing an investment property in Tucson, Sahuarita, or Green Valley.
Know Your Numbers
It’s important to understand your costs; ALL of them. Just some costs associated with ownership are:
- Principal Payment
- Interest on Payments
- Insurance (PITA)
- and more!
Ask yourself honestly…are you prepared to take on this level of financial responsibility?
It’s important to know what you can afford. Once you know what you can afford, start your search. The best investment properties start at $75,000. Always make offers that are lower than what fits your budget, which would be predetermined by getting pre-qualified. If you get a higher priced deal that fits in your budget requirements, then you’re in the sweet spot. This will result in a bigger bang for your buck, a nicer investment property, and you’ll make some money.
Location, Location, Location!
Look for investment properties in the city near transportation, trains, bus lines, food, retail, or entertainment; but far enough away that it’s quiet. You’ll want to have something attractive to offer the potential buyer/renter. When it comes to investment properties, it’s smart to find the worst house on the best block. Look for signs of money, upkeep, good neighbors, and steer clear of boarded up buildings. Look for properties that have curb appeal, charm, look cozy, and character. It’s also important to make sure the neighbors maintain their properties to help hold up the property values.
Know Your Investing Area
Get to know the area where your looking to invest. To do that, you’ll need to become a market value expert. Where do you start? Find a broker, like The Vanguard Group, and get a list of all of the active, contingent, and closed/sold properties in your exact 6-8 block area. Study them. Visit the active listings when open houses are available. See how many bedrooms, bathrooms, bedrooms (making sure to note room sizes), garage, storage areas, etc. that each property has. Spend at least 10-15 minutes in each home. Make sure to take note of the good, the bad, and the ugly. Compare the length of time on the market and try to figure out why one home sits while the others sell. Is it because of updates, paint, colors, cluttered? This information will be very beneficial as you learn your market.
Don’t buy the IF or BUT deals. If you find yourself saying, “If only if this was not here…” or “I love this house but…” or “If this, than that…” The reason for this is that if you already feel this way about the property, so will other people, including your potential buyer/renter. Bottom line: no IF or BUT deals.
Don’t want to sell your investment property but don’t want to pay the mortgage? You can actually get your tenant to pay your mortgage by renting out the property. A lot of investment property managers will be willing to work with you to manage the tenant process, allowing you to only reap the rewards and inherit none of the headaches.
These tips mark the very beginning of your real estate investing career. They are a good way to begin molding your mental journey into property ownership. It’s not easy but owning property long-term is how most generational wealth is earned. The Vanguard Group is here to assist you in anyway possible. Contact one of our experts today!