Tuesday, May 20, 2014

3 types of property to invest in

Investing in real estate provides several benefits such as capital growth and control over investment decisions. One of the first decisions you’ll have to make as a property investor is deciding on which property to buy. It’s important to choose an inexpensive property in order to maximize your profits. 

If you plan to rent out your investment property, it’s also a good idea to keep your eyes open for underpriced properties in neighborhoods with a good rental market. These properties tend to be in better condition than fixer-uppers and foreclosures. 

Here are three good property investment options to consider… 

1. Fixer-uppers

Fixer-uppers or properties that need major repairs or renovations are typically priced lower than properties in better condition. Home buyers tend to shy away from these properties because they don’t want the headache that comes with remodeling and repairs. 

However, for a property investor, a fixer-upper can be an inexpensive investment. This is where your negotiating skills can really make a difference. Know the seller’s bottom line and buy the property at the lowest price possible. 

Be sure to carefully assess the property’s condition before you buy it. Unforeseen damages in the property can make for expensive repairs that may eat up your profits. It’s best to consult an expert to get a better idea of the property’s condition. 

2. Foreclosures

Foreclosed properties are properties that are put up for sale by banks and other lending institutions, since the previous owners are unable to pay their mortgage loans. Like fixer-uppers, foreclosures should be examined carefully before you commit to the purchase. 

The previous owner’s financial state can make for a poorly maintained property. Some spiteful owners even go as far as vandalizing the property to get back at the bank or lending institution. Door handles, kitchen fixtures, lights and even copper wires are sometimes stolen. Worse cases have cement flushed down the drains, making for clogged pipes that need to be replaced entirely. 

Despite these risks, there are still some hidden gems among foreclosed properties. You may just find an inexpensive property in good condition. 

3. Underpriced properties

If you plan to rent out your investment property, it’s also a good idea to keep your eyes open for underpriced properties in neighborhoods with a good rental market. These properties tend to be in better condition than fixer-uppers and foreclosures. 

There may also be more investors and home buyers interested in the property, making for stiff competition.

Focusing on the property’s market instead of a low price is a good tactic. This will give you a surer return on investment later on. Properties in great condition can also be rented out without undergoing major renovations for years to come.  


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