Making the decision to buy an investment property is an exciting step. It is important that you make this decision with the utmost consideration. To ensure that you get the most out of your investment, it is crucial that you are aware of the proper steps of the process and the basics of investing. To learn more, continue reading and contact our New York City real estate attorneys.
Am I ready to buy an investment property?
It is important that you are financially and emotionally prepared for a commitment as big as purchasing an investment property. It is a serious venture to run and care for an investment property. There are various factors to consider before deciding if the timing and property are right for you. You must consider the following factors to learn if you are ready to purchase an investment property:
- The cost of the mortgage
- The operating costs
- Tenant issues
- Your ability to tolerate risk
How can I know if a property is a good investment?
When considering if a property is a good investment, you must analyze if the property has the potential to make money in the long run. This can be determined by calculating the return on investment (ROI) of the property. This can be established through the net annual return of the property including the rent that would be paid to you, minus taxes, utilities, repairs, insurance, and property management costs. You will then divide the net annual return by the amount that is spent on the property, which will determine the cost-benefit analysis.
What should I look for in an investment property?
Before making a purchase, there are many factors to consider when considering property investments including the following:
- Is the house a fixer-upper? If you do not have experience handling fixer-uppers, this may not be the best purchase. This process requires more work. However, it can be beneficial for those who have the experience to expand their investment portfolio.
- What are the vacancy rates? Lack of tenants will make it difficult to have a return on investment.
- Are there demographic/psychographic shifts? It can cause positive or negative impacts if any kind of campus is built or pulled out of your market.
- Will the market support my rent? A property should be rented for at least 1% of the property value each month.
Contact Our Firm
Zimmet Law Group, P.C. is an experienced team of attorneys guiding clients through matters of estate planning and administration, divorce and family law, real estate, commercial litigation, business law, bankruptcy, and landlord-tenant law. If you require the services of an effective New York City attorney, contact our firm today to schedule a consultation.