Questions every first time property should ask

by - September 27, 2016

If you’re a first-time investor, what do you need to know before you take that leap into your first investment property?

Here are five questions to ask yourself (along with a little advice) before you decide to invest in a rental property:

1. What type of investment is best for you?

Buying an investment property does not necessarily translate into becoming a landlord. Many first-time investors look to buy property to flip and resell for profit. Decide if your interests lie within a single-family home, duplex, apartment building or commercial property. Don’t be afraid to consider all options, but be sure to do your homework on the responsibilities that go along with each type of investment. Once you know what you’re looking for, it will be a lot easier to narrow down your search.

2. Are you financially able to handle the risks and expenses involved in owning an investment property?

If you invest in a rental property, you may be receiving monthly rent in return for your investment right away, but you will also be responsible for the costs of owning the property, such as taxes, insurance, maintenance, repairs, etc. etc. etc. Of course, that is assuming you have immediate tenants and their monthly rent covers the total cost of your mortgage. If either is not the case, you certainly will be looking at additional expenses. As with any home purchase, it is good to get preapproval before you begin searching for the ideal investment property.

3. What is your reason for investing?

Purchasing investment properties can be a lucrative business in itself, so is that your plan? Are you goals to quit your job and make a living solely from investing or are you just trying to ramp up your funds by adding additional income from investments. Both are great goals to keep in mind, but make sure you know what your goal is before you dive in to purchasing that first property.

4. Do you have a good support system?

If you are purchasing an investment property with the goal of renting it out, make sure you have your supporting cast of maintenance and repair specialists on call from the get-go. You don’t want to run into a situation where you have a tenant facing an issue that you can’t fix. Attorneys and accountants are wise to keep in your arsenal as well, in case you run into any legal issues with tenants or tax issues. If you don’t have the time to handle the day-to-day duties of being a landlord, consider adding a property management consultant or firm to that list of specialists, too.

5. Do you need help from an experienced professional?

As a first-time real estate investor, it may be helpful for you to partner with an experienced real estate agent, who can assist you in finding the right investment property. Location is important! Depending on the type of investment you want to make, an experienced real estate agent may know the areas and types of properties you should be looking for. If you establish great rapport with an experienced agent now, they may be able to help as you continue to build your investment property portfolio!

Undoubtedly, purchasing an investment property can be a great source of income, but it can also be a great headache if you don’t know what you’re getting in to. By asking some basic questions, first-time investors can decide if now is the right time to make their investment property dreams come true.

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