Investment property concept

Buying an Investment Property?

Here Are 5 Tips for a Better Investment Property Transaction.

If you are looking to purchase additional property beyond your primary residence, you have to have a good plan. It is important to explore your options, understand your objectives and stay focused on what matters most.

Whether you are looking to buy a second home or an investment property, here are 5 tips from The Cyr Team to get you started:

1. Define Your Goals

The first step is to understand what kind of secondary property you should buy. Are you strictly looking for a second home (vacation home) in a different area? Maybe it’s a key part of your retirement plan or you just want another place to spend time once or twice a year. You may be using it to house a family member. Or, are you wanting to purchase a property purely for investment purposes. You want to expand your portfolio and real estate is generally one of the safest long-term investments available. Are you looking to renovate and flip a house for a quick profit? Are you wanting to buy and hold as a rental property for additional monthly income and long-term appreciation?

2. Understand the Benefits

How you intend to use the property will greatly affect the search and purchase processes. Your priorities and goals should define your plan and limit your options. Buying a second home for personal use is vastly different than buying a rental property, so let your goals drive your actions. Your tax liabilities and what you can write off will differ depending on how you utilize the property, as well. The same goes for your lending options. You should understand all the specific benefits of your different buying options and weigh the pros and cons before making any major financial decisions.

3. Talk to Your Advisors

Before you jump into buying a second home or investment property, you want to talk to expert advisors who can provide objective guidance and support through this significant financial transaction. Sit down with your real estate agent, attorney, financial advisor, accountant and lender. Figure out your plan, budget and goals in order to make smarter moves when it comes time to make your investment property purchase.

4. Know the Numbers

Whether you are buying property purely for the investment gains or it is a second home, this process is going to be very different than buying your primary home. That decision was largely emotional. It is YOUR home. Though there may still be some emotions involved if buying a second home or vacation property, the same cannot be said of purchasing investment property. Decisions need to be much more financially driven. Set your budget and do not go outside of your realistic spending range. Run careful analytics on any properties you are considering purchasing. Calculate the potential return on investment (ROI) before making the purchase. Do your research before it’s too late to turn back!

5. Start Small

Whenever someone comes to us asking about buying an investment property, we always recommend they start small. It takes time and experience to be a big time real estate investor, so don’t expect a life-changing windfall with your first investment property purchase. Buy a smaller townhome or condo, or a house that is well within your budget. Gain some experience and understanding before trying to expand your real estate portfolio further. Over time, you will get better at what you are doing and, eventually, you may end up owning several properties that provide you with excellent financial benefits for many years to come. Just start small and act carefully with your first transaction to ensure success.

If you are looking to buy an investment property or second home, we’re here to offer professional guidance. Contact The Cyr Team today and let us help you make the right decisions for your future.

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