Buying houses and apartments is a great way to diversify your investment portfolio as you benefit in a number of ways, from the rental income from your property and the long-term growth in the property’s value, or from the profit you get from flipping it. However, making a success of a property investment takes a lot more than simply jumping in on the next opportunity you see. Here are some tips from our team of real estate specialists in Dallas and Fort Worth.
- Get to know the local economy: Local knowledge is an important factor in making a wise investment choice, so take some time to look at the bigger picture of the local economy to get some insight into the growth potential of your investment. Good signs include new employment growth in the area and the expansion of new and existing industries. These are key factors in driving demand for property, especially in the rental market, and a good local economy means plenty of quality buyers.
- Research the housing market: Now’s the time to behave like you’re the buyer or renter you’re hoping to attract. Take a critical look at housing types and availability in the market, look through local listings to get a good idea of the going rental rate, and investigate similar houses and properties to familiarize yourself with property prices. Don’t just look at the type of house that appeals to you – remember, you are essentially shopping for someone else, so you want a place that appeals to your ideal renter or buyer. This may mean looking at access to schools and kids’ amenities in the area, transport links into the city, access to shopping centers and attractions, crime statistics and more, all from their point of view.
- Prepare for the mortgage: It’s essential to develop a detailed and accurate budget for your investment, and financing a property comes with many costs, so be sure to research the investment property rates – not buyers property rates. You’ll have to investigate different lenders to find the best rates and be prepared to deliver a down payment of around 20% as mortgage insurance isn’t available for properties that you are planning to rent.
- Rent or flip: These are two very different investment strategies and it’s important to research the pros and cons of both. Flipping a home has become popularized by many TV shows, and the reality is that it takes a lot of cash up front as well as personal time and energy to make it a success. You’ll have to buy, fix and sell the home as quickly as possible to maximize profit, which can be incredibly stressful, costly and time-consuming, depending on the level of repairs/remodeling needed and the market for your property. The longer it stays on the market, the less profit you make – but a quick sell can be incredibly rewarding. Renting usually means fewer and more minor repairs but this means it’s a long-term grind to get your investment paying off. There’s also a long-term commitment to finding tenants, maintaining the home and managing the property, but the dual benefit of passive rental income plus growth in property value makes this a very attractive strategy.
- Consider the costs: Whether you rent or flip the property has different implications for additional costs in your budget. A rental property usually requires minimal repairs and updating, while properties that are sought-after for flipping can mean buying at a lower price but doing extensive remodeling. It’s a good idea to have a pre-inspection done on the property to uncover any major structural or costly issues, and this should be combined with a walk-through by a trusted local contractor who can develop a quote on how much the repairs and upgrades will cost. This can then be factored into the sale offer and help determine if it is the right property for you. A good rule of thumb is to avoid places that need extensive repairs if you plan to rent, as you want to maximize your long-term investment with minimal costs. If you plan to flip, you need to decide how much you are willing to spend on repairs as this will determine how much you want to spend on buying a property and what your potential return will be.
If You Want to Sell Your Home, Our Cash for Houses Team Can Make You an Offer Today!
The Shiny Key Properties team is a leading property agency in the Dallas and Fort Worth Area. If you’re interested in selling your home quickly or just want an honest evaluation to help you decide if you want to sell your home, contact us today for a no obligation cash offer for your property.