Crucial Tips for Purchasing Your First Investment Property

There’s nothing glamorous about being a landlord. In some situations (not all), you may have to respond to calls about water leaks and broken-down appliances. And you may run into your fair share of confrontations with tenants.

That said, investing in real estate is an excellent way to diversify your investment portfolio and open a steady stream of additional income. If you prepare beforehand and make careful decisions along the way, it can prove lucrative and set you up for further investments. From understanding the advantages of working with realtors like Dany Amparano, here are some no-nonsense tips to consider before buying your first investment property:

Know the Benefits

Most real estate investors purchase a property for one of two reasons: to rent it out or flip it. If you have a knack for performing construction and maintenance and you don’t want to be a landlord, then buying a fixer-upper, fixing it, and selling it might be your best option. However, if you want more of a long-term investment that can provide consistent income, then renting out your property is probably the way to go.

If you own just one rental property, then maintaining and managing it shouldn’t be overwhelming. That said, if you have the budget for it, then you can hire a property manager to take care of those tasks. This can especially be worthwhile if you have more than one property.

Another advantage of purchasing a property to rent is that there are few barriers to entry; investors with little to no experience can succeed in buying and renting out a home. For this reason, it can also be an effective way to kickstart your investment portfolio.

Determine Whether You Will Be Active or Passive

There are two major types of real estate investors: active and passive. Understanding the role you want to play in your investment is critical to your success. An active real estate investor is hands-on throughout much of the process. This usually allows you to have more control, better tax advantages, and fewer fees overall. But active investment also requires you to have the expertise, and many people find that being so involved becomes overwhelming.

Passive real estate investment, on the other hand, comes with much less hassle. Since you’re investing through other entities (such as real estate investment trusts (REITs), individual real estate funds, and crowdfunding) you have less control of the property. However, passive investment requires less knowledge and tends to bring more diversification to your portfolio.

Dig for Details

Before you buy any property, it’s essential to consider every detail to ensure it’s a sound investment. For example, the property should be located in an area that appreciates in value and attracts your target tenants. You should estimate the cash flow you will earn from the property to ensure it’s worth your time and effort. And as your first real estate investment, it’s wise to purchase a property in the low- to mid-range price bracket; that way, you can still make money and there is less risk involved.

Develop Relationships

Lastly, start to build relationships early in the process. Find a mentor with ample experience in real estate investments who can help you get off to a strong start and guide you through challenges. Connect with other investors who might point you toward good investment opportunities in the future. And find a reputable real estate agent like Dany Amparano who can make the home buying process much easier and less stressful for you.

Investing in real estate may seem daunting. But as long as you go into it prepared and make well-informed decisions, you can put yourself in a position to thrive. Consider the advice above, and keep researching what it takes to be a successful real estate investor.

 Are you looking to work with a top-notch realtor in the Jacksonville area? Contact Dany Amparano today by calling 904-491-2124 to schedule an appointment!

(written by Natalie Jones from Homeowner Bliss).