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Tuesday, 27 October 2015

Criteria to Consider While Purchasing First Real Estate Investment Property

Real estate investment seems to be lucrative but is also associated with risks. It is a tedious task to purchase a real estate property, pay off the closing costs, doing marketing to find clients. There are certain criteria that one must consider while making a first real estate investment that wouldn’t turn one into a loser.

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Pick a Familiar Neighborhood

The most important thing to do is to look for real estate properties in the localities that you are familiar with. Deciding upon the location is vital when starting to look for properties to invest in. New real estate investors have the tendency to opt for properties in upcoming neighborhoods and because of lack of knowledge of pricing; they may end up cracking a bad deal. Follow the home listings for a while to get the idea of the price listing in the locality.

Consider properties with Outdated Styles

The best way to generate quick cash in the real estate market is to go for a property that has an outdated yet sturdy structure. It can be converted into a brand new structure without having to break your bank account. These properties can be purchased at a bargained rate or in sales. The rehab work can be limited to flooring, paint and fixing new cabinets. Remodeling of kitchen and bathroom can prove out to be bit expensive but these offer a high return on investment.

Avoid Structural Issues

The surface repairs can be done easily within a fixed budget. Deeper structural repairs can prove out to be expensive and result in investment losses. It is always a great move to have the property inspected by an experienced professional. Foundation repairs must not be ignored as these can prove out to be quite expensive.

Beware of maintenance charges

A pool is undoubtedly a great addition to any property but it can also prove out to be a money pit. The cost of fixing a pool can turn out to be more than $10,000. A pool having chips or cracks in the lining will require a massive face shift. You also need to look for broken and damaged filters. A well maintained pool is always a great asset.

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Be flexible with the budget

While purchasing your first property you need to make sure that you have enough cash in hand. Rehab may make you shell out additional amount. Underestimation of costs is a huge mistake made by many real estate investors and they thus end up leaving a project incomplete. When you don’t have enough cash you need to look for a lender to partner with you to bridge the gap.

The Bottom Line

Real estate investing can prove out to be a great income source when you take it up as a full time or part time business. Every successful real estate investor would have gone through the phase that you are undergoing while planning to make your first purchase. Plenty of research needs to be done to pick a house, complete the purchase and turn it into a money generating venture.