Buying your first investment property should not be an overwhelming experience for many investors. As you invest your hard-earned money to earn long-term profits, it is essential to consider a few key points and have a thorough knowledge of the local real estate market.
At Bickerstaff Parham Property Management, we have helped hundreds of first-time investors with detailed market research and guided them towards choosing a house that can help them maximize their ROI in the long run.
Based on our experience, here are five key points that you must consider when buying your first investment property.
The Columbus Real Estate Market Trends
Study the real estate market trends out and out. If you’re planning on investing in a residential unit, analyze what type of residential properties are in demand. Similarly, if you are interested in buying a commercial asset, study the potential returns and losses associated with commercial real estate investment. Study the type of mortgages that are available for first-time investors and which one can work best for you. This definitive research of the market trends will empower you to decide how you want to invest in the Columbus real estate market.
The Location Of The Property
In the real estate business, the location of the property has the maximum impact on its value and the subsequent rental demand. Hence, we suggest that you select a desirable location before choosing a place for obtaining long-term benefits. Analyze the current and future rental demand in the locality and whether there are ample public amenities like parks, schools, shopping malls, and restaurants. Talk to one of our expert property managers about whether you should go for a new, resale, or fixer-upper unit, based on your budget and risk aptitude.
The Different Options For Financing The Purchase
As a first-time buyer, you need to assess your financial readiness before investing in a rental. Know that down payments are different for owner-occupied properties and rental properties. Even if you secure your own home with a 3%-4% down payment, you will require a minimum of 20% down payment for a rental house. Plus, mortgage insurance is not an available option for rental properties. Look out for the available options to finance your purchase, like,
- Conventional Bank Loans
- Hard Money Loans
- Private Money Loans
- Home Equity
Calculate and compare the interest rates, evaluate the margins, and choose the type of loan that suits your parameters the best.
The Fixed, Variable, and Flexible Expenses
You can figure out your budget by calculating the fixed, variable, and flexible expenses of purchasing and renting a property.
Fixed expenses are those that cannot be reduced or skipped. For example, property taxes, HOA fees (if applicable), homeowners’ insurance, maintenance costs, and property management fees, and so on.
Variable expenses are unanticipated yet unavoidable costs that ultimately add to the value of your house. These include sudden repair costs due to natural calamities.
These are the non-essential expenses that you can spend on, if your budget allows. These include renovating the property, adding appliances, or making changes to increase the aesthetic appeal of the place.
The Risks Involved In Buying The First Columbus Investment Property
Risk assessment is essential for any real estate investment. It helps you make an informed decision and be prepared for any potential setbacks in the long run. An unanticipated rise in property taxes, changes in rent control laws, fluctuations in local market trends, and the subsequent rise or decline in value are some of the risks you should consider while buying your first investment rental. Investment in itself is a risk, but don’t let it be an uncalculated risk.
If this is your first time investing in Columbus, we highly recommend hiring an experienced property management company, like Bickerstaff Parham Property Management. We are a Columbus-based firm for decades and know the nitty-gritty of the real estate market here. Our team can help you choose the most suitable property that aligns with your financial goals, budget, and ROI requirements.
For more information on purchasing your first investment property in Columbus, talk to one of our expert agents today!