Purchasing an investment property can be a good financial decision that pays off in the long run, but this decision does not come without risks. The more you consider all the factors that go into this purchase, the better you can plan and the higher your chances are of being rewarded for making a wise investment choice. Here are three items to consider before buying an investment property.
First, consider if you want to lease your investment property out to a business or individual renters. Some locations might be zoned such that they do not allow business or multi-family properties. If you decide that you want a commercial rather than a residential investment property, make sure that you buy in a location where a business would want to establish itself, such as in a business park or a fast-growing part of town.
Investment properties tend to have stricter requirements for securing financing and require a larger down payment than personal properties. Some factors to consider when deciding on a budget include your income, credit score, debt-to-income ratio and how much you expect to make from your investment. Have some idea of these figures if you decide to go the route of acquiring commercial lending Hoboken NJ for your property. Be sure to leave enough money for variable and fixed expenses like:
- Property taxes
- HOA fees
- General upkeep such as landscaping and cleaning
- Unexpected repairs
3. Time Commitment
Do you want to own a single investment property or multiple properties? Do you want to hire a property manager or would you prefer to be a more hands-on landlord? The answers to these questions depend on your finances and the amount of time you have to maintain the property.
These three items are important to consider before embarking on the venture of becoming an investment property owner.