Buying a new investment property in Richmond is an excellent way to bring in extra income for you and your family. In our latest post, we will offer 7 tips to help you find and buy the Richmond investment property that is right for you!
As they say, real estate has made more people wealthy than any other means. By finding and choosing the right Richmond area property, you can set yourself up to make a substantial amount of money. Keep reading below to see seven of our best tips for buying a new investment property in Richmond
Tip #1 – Buy Based On Facts
When you are getting ready to buy an investment property in Richmond, it is important to never buy based on emotion. Buy based on numbers and facts. Remember you are not going to be the one living there. Don’t get stuck with a bad investment because a particular feature of the property stood out to you.
Tip #2 – Have The Cash Upfront
If you aren’t able to buy the house in cash, make sure you have enough for a hefty down payment. Mortgage insurance does not cover investment properties, so you will need at least 20% down if you want to get a loan. In addition to your down payment, there are typically other expenses that arise when buying a new home. Repairs, cosmetic fixes, closing costs, and administrative fees can add up pretty quickly.
Tip #3 – Start Small
Your first investment property shouldn’t necessarily be an apartment building. Start with something you can manage until you learn the ropes. There will always be a bit of a learning curve no matter how much you have studied up.
Tip #4 – Set Your Limits
Know how much you can pay for your investment property in Richmond. Determine the neighborhoods you are targeting, how much you are willing to fix on the property, and the size of the home you want to buy. Keep in mind, a lower cost home will usually cost less in utility and repair costs too.
Tip #5 – Work With The Right People
Whether you are buying your first investment property in Richmond, or you are a seasoned investor, it is imperative that you work with the right people. Working with other professional home buyers and sellers in the area will help you find deals you may not have found on your own. At Patterson Property Solutions we work with other investors, cash buyers, and people looking for a deal on a home of their own.
Tip #6 – Watch Out For Fixer-Uppers
Always be wary of fixer-upper properties, especially if you are new to investing. Fixer-upper properties can be an excellent deal, but some can have repairs snowball, and end up costing you a fortune in the long run. Instead, look for homes with only minor cosmetic defects. Many homes are passed on because they are not aesthetically pleasing. This is your chance to find a great deal on a home that could potentially be a great investment.
Tip #7 – Expenses and Returns
Before buying a property for investment in Richmond, you’ll want to calculate your operating expenses as well as your rate of return. Your operating expenses include things like maintenance, insurance, and property taxes. Your annual return is how much you received over the course of the year, minus your operating expenses. To calculate your ROI, divide your annual return by the total amount you paid for the investment, repairs and all. A good investment property will bring in a least a 6% return.