Are you trying to get return on investment (ROI) for your property investment, or are you simply seeking your dream home? Different investments will be more or less appropriate depending on the property, your resources, and your endgame. Even so, there are common considerations you should take into account regarding any investment. Five that are exceptionally considerable, and which generally apply to any property acquisition, will be briefly explored here.
#1: There Are Always Unexpected Costs
It’s just not realistic to expect you’ll know all the costs upfront. Human design is subject to human flaws. If you don’t believe that, consider the Disney opera house in Los Angeles, which is a building that bears the nickname “fryscraper.” While the building is a structure engineered to something near perfection, it reflects sunlight so hot cars parked nearby melt, and that is ultimately the responsibility of those who own the structure.
So sometimes collateral issues develop that are unpredictable no matter how carefully you think things out in advance, and they cost you—even if you build the property from the ground up. Give yourself a financial margin for error.
#2: Location Matters—Buy In The Right Location
City, municipality, and neighborhood will affect the value of property. The poor economic climate of Detroit has pulled the bottom out from the real estate market. Though it has sectors in recovery, many areas are in serious decline. If you buy in the wrong neighborhood, you’ll see your investment decline very quickly.
#3: Don’t Neglect To Consider As-Is Properties And House Flipping
Sometimes you can get a great discount on a property that can be fixed up and turn a profit inside a year or two. You might start with small as-is properties, live in them while you fix them up, get your money back, then turn your profits into sequentially larger homes.
If you’re going to go this route, do yourself a favor and consider the advice of consultants and professionals who know the market, and how best to buy. One great resource like this you might want to consider is ISoldMyHouse.com.
#4: Acting As A Landlord, You Can Defer Mortgage Expenses
You can actually make back money on a sub-par property in a bad neighborhood if you rent it out. This isn’t ideal, but it’s also not a bad idea if you’ve got the ability to remotely manage a long-term investment. If you get a house with five bedrooms, you can even manage the property while living there at a profit.
#5: Account For Costs Associated With Acquisition, Like Taxes
When you buy a property, Uncle Sam wants his cut. However, if you sell a property and turn that money into a new home through a 1031 Exchange, you can avoid a big portion of that taxation. Especially if you’re flipping homes, this can be a great legal way to dance around the majority of taxes.
Optimizing Investments For The Best Outcomes
Take multiple factors into account for the best results in property investment. Taxes need to be taken into account, mortgage expense deferral through landlord management is wise, as-is properties can be profitable if you flip them properly, location is fundamentally important, and you should expect the unexpected in terms of costs with every purchase.
If you take these tips into account whenever you buy a property, they can enable you to more efficiently acquire and manage property for a profit.
About the Author: Ashley Lipman is an award-winning writer who discovered her passion for providing knowledge to readers worldwide on topics closest to her heart – all things digital. Since her first high school award in Creative Writing, she continues to deliver awesome content through various niches touching the digital sphere.
