Buying property is a big decision, but it can be one of the best you can make for your investment portfolio. No matter what your plans for your investment are, it’s crucial to set yourself up for success right from the get-go. Choosing the right property is just the beginning; from taxes to furnishing to management, there are many factors to account for. Here’s our list of the top 8 things to consider before buying an investment property:
1. Location, Location, Location!
This famous real estate adage is tried, tested, and true; location is key to a viable real estate investment. Consider a home’s proximity to desirable amenities. Is there public transit nearby? What about parks, shopping malls, schools, hospitals and community centers? Conversely, think about whether a given property is close to anything that would make it less attractive to a potential resident, like busy roads, train tracks, an airport, or a wastewater treatment facility. Working with a trusted Realtor® means they may also be in the know about what may be coming down the pipe in a local neighborhood. If the house you’re looking at is backing onto an empty field that will eventually be a shopping mall, that’s something you want to find out in advance.
If you choose to offer your property through AvenueWest, you’re in luck; we operate in 150 cities across the United States, meaning no matter where your investment property is, we can help you get the most bang for your buck.
2. Condition of the House
Is your new investment property ready for market, or is it a fixer-upper? While a property in need of some TLC has more opportunity for transformation, having fewer repairs and improvements to do means you can list sooner rather than later, saving you time and money. On the other hand, if you have the time and skill to roll up your sleeves and make improvements that will drastically increase the value of your property, it may be worthwhile for you. Keep in mind that acreage is often more important than the quality of a house because land tends to increase in value, so no matter what state your home is in, it has market potential.
3. Rule of 1%
The “Rule of 1%” says that for every $100,000 you spend on a property, it needs to bring in $1,000 in income (not including other expenses, such as upkeep, taxes, insurance, etc.). AvenueWest specializes in fully furnished managed corporate housing, which is among the most lucrative varieties of investment properties. These kinds of properties can bring in two to four times as much revenue as their counterparts.
4. Property Taxes
What was it that Benjamin Franklin said about death and taxes again? Your tax rate will vary depending on several factors, including the value of your property. For example, vacant lots will have significantly lower assessed rates than properties that have been developed. In any case, make sure you have an idea of what you’ll be paying in property taxes should you decide to purchase.
5. Insurance
Home insurance is an obvious step to take to protect your property — especially if you plan on leasing it. As with property taxes, knowing what you’ll be paying in insurance is a crucial step in knowing that you’re making a smart investment.
6. Property Management
If you’re going to be leasing your property, the most straightforward and stress-free way to do so is through a property management team. A property that is being managed for you means that you don’t have to worry about the day-to-day logistics of your rental, from lease agreements to repairs to marketing. As leaders in the managed housing industry, AvenueWest has simplified the rental process and specializes in managed corporate housing. Short-term corporate furnished units not only bring higher rents but are significantly less likely to have wear and tear as tenants are cognizant that their employer is paying their rent.
7. To Furnish or Not to Furnish?
That is the question! While fully furnishing a property is certainly an investment, it substantially increases the appeal and money-making potential of a given property. According to apartments.com, furnished apartments can go for 15-20% more than unfurnished units. Listing your home as a managed corporate rental through AvenueWest will allow you to truly maximize the value of your furnished home as corporations pay more for the same property.
8. Unexpected Costs
Finally, you’ll want to be prepared for any unforeseen costs that might come up during the process. Whether it’s a surprise repair or having to do more renovations than anticipated, expect the unexpected. It’s always safe to have a rainy-day fund for whatever curveball you may face when getting your home ready for market.
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Want to know more about how to transform your investment property into a high-return, reliable stream of income? We’d love to help. Managed corporate housing is one of the most effective ways of maximizing your property’s earning potential. For nearly 25 years, AvenueWest has earned a reputation for being industry leaders in corporate housing, guaranteeing a signature experience for both renters and property owners. Reach out today to learn more, we’d love to hear from you.
