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If you’re in search for the perfect investment property in the New York City area, then there are some real estate-savvy pointers to keep in mind before you make your purchase. Besides, just because you think a certain property is desirable doesn’t mean future renters will. In order to help you get the best return on investment, here are four tips you should follow when searching for an investment property.
1. Put Yourself in the Renter’s Shoes
One of the best ways to find an investment property that will satisfy your monetary expectations is to look at properties from the renter’s perspective. Is the home or apartment worth the amount of rent you’re expecting to charge? Does the neighborhood justify the costs?
Image via Flickr by Philip Taylor
Everything from the area and the size of the bedrooms to the number of closets, the neighbors, and neighborhood itself play a huge role in a renter’s decision. For an investment property, sometimes you have to put the renter’s desires ahead of your own if you really want achieve the best financial results.
2. Run the Numbers
Many buyers looking for investment properties oftentimes don’t run the numbers until it’s too late. A cost-effective way to look at a rental property is to assume that a considerable percentage of the rent you receive will go toward expenses — like property taxes, insurance, and common charges — before it affects your mortgage payment.
This means you have to get the monthly mortgage down to a reasonable price so the rent covers mortgage costs while still putting some money in your pocket after expenses. With that said, buying the property in cash or with a large down payment of 50%+ can put the numbers in your favor for the extent of the investment.
3. Find a Buyer’s Agent
Whether you’re well versed in real estate or not, having a little help along the route to an investment property is worth its weight in renting gold. That’s why it’s wise to find a buyer’s agent who can help you navigate the home and apartment buying waters and ensure you find an investment property that will provide you a steady income.
4. Avoid a Fixer Upper
Although the price of an apartment or home that needs a little work is probably attractive, a fixer upper could spell trouble down the road. So, instead of pouring your finances into a less-than-desirable property, raise your budget and find a home or apartment that will give you a return on your investment from day one.
Fixer uppers are great if you have the time and patience it takes to restore the property to its former glory, but there are a lot of strings to pull to make that happen, including finding the right contractor and pulling the necessary permits. If you really want a lucrative property, find one that’s cosmetically ready, mechanically ready, and move-in ready — it’s worth the initial bump in the budget.
By keeping in mind the tips above, you’ll find an investment property that actually turns a profit.