It’s become clear that investing in real estate is an excellent way to establish wealth and grow a healthy financial portfolio. However, you have to invest the right way and you have to choose the right properties.
Investing in rental homes can result in short-term income and long-term returns. There are lots of benefits to this type of investment, from appreciation to tax advantages.
When you’re deciding what to buy, you’ll want to think first about your investment goals. Maybe you’re buying a retirement home that you plan to live in 20 years from now. Or, perhaps this is your strategy for diversifying and strengthening a growing investment portfolio.
Whatever your purpose, understanding your own goals and expectations is the first step in buying an investment property. Then, you’ll have to choose the right home in the right location and surround yourself with experts so you can be sure you have a successful experience.
Today, we’re helping you determine what type of investment will help you meet your goals.
Identify the Right Oakland Investment Property
When you’re investing in real estate, you need to know what you’re looking for and what your investment goals are. Do you have specific goals? Are they written down? These are important first steps.
It’s easy to become emotionally involved with property, even property that you’re not going to occupy yourself. Think from a business perspective rather than an emotional perspective. The right investment home probably doesn’t have granite counters and hardwood bamboo floors, unless your goals are to buy in very high-end areas and attract top-dollar tenants.
Think about that ideal tenant when you’re buying the property.
Sometimes, investors want to buy low-cost homes in need of a lot of work because the price tag is so dazzling low. They seem like a good deal. This can work for a very specific investment strategy, but don’t waste time and money on homes that will only delay your income.
While the prices are certain to be attractively low, the amount you’ll have to spend to get that property into rent-ready condition may be more than you expect. Not only will you have to invest in repairs and rehab, you’ll also wait longer to begin earning rental income.
Crunch Your Numbers and Buy a Profitable Investment Home
Focus on neighborhood data, tenant pools, and numbers that will help you calculate your anticipated ROI. The best investment property will make sense financially and allow you to earn more than you’re spending.
Estimate your income and expenses. Make sure those numbers fit into what you need and expect from this investment. Your comfortable cash on cash return and cap rate will depend on your investment goals and what you need to make this purchase work.
Run the numbers across several different scenarios. For example, what will happen if you have a vacant property for six months? How will your cash flow be impacted by maintenance work? These are things you need to factor in when you’re determining what you’ll earn and spend on a property.
Professional Oakland Property Management
Another important tip to consider when buying an Oakland investment property is that you probably need professional help. A good property management company can help you have a better investment experience. You can rely on a property manager’s local expertise and knowledge to estimate the amount of rent you’ll earn and the amount of time it will take to find a great tenant.
A good property manager can also discuss what kind of cosmetic or functional repairs and updates will be needed before the property you’re considering is ready for the rental market. Don’t wait until you’re ready to rent the property out to consult a property manager; find out what you need to know before you buy.