Like getting involved in any business in Sacramento, CA deciding to invest in property can be an extremely lucrative venture, but that doesn’t mean it’s necessarily fast or easy to do. If you’re looking to invest in property, you need to plan and approach it carefully, and there are four factors you need to consider when evaluating any property for investment needs.
The Down Payment
It all starts here. How you approach the down payment depends a lot on your investment goals. Do you plan to acquire this property for the long term to generate income for you through rental? Or do you plan to renovate the property, then put it back out on the market at an increased price?
The speed with which you need to secure a property and the size of your down payment play major roles in the kinds of interest rates you will be facing for holding this property. Consider your ultimate business goals with the property and plan accordingly.
If you’re going to be using a property to generate income for you through rental, how do you plan to maintain it? Is this something you’re willing to devote time to yourself, as a landlord, or would you rather leave day-to-day needs to someone else, like a property manager?
The final numbers and profitability of your property will be affected by the presence or absence of a property manager. However, the long term benefits of a property manager generally mean a more stable income for people with an eye to the future.
It would help if you figured in the weekly, monthly and annual expenses involved with your property. Does it require, for example, outdoor maintenance such as trimming hedges, and if so, are you willing to commit to this? What are the bills like for utilities such as water and electricity, and are you covering these expenses or leaving them to tenants?
Profitability only comes if the revenue you’re generating is greater than the money you’re spending. Make sure accurately assess what your expenses will be, so they don’t eat into your earnings.
Try to plan for the unwanted or unexpected. Tenants, for example, are far from guaranteed to move in and faithfully stay and pay rent for 50 years. What will do you do, and how will you handle the loss of income when a property is empty?
In the same way, what will you do if something goes wrong? A lightning storm can knock a tree into the windows of your property, or you may find yourself dealing with unruly tenants that damage the property. Do you have safeguards in place to deal with these incidents and quickly recover from them?
If you’d like to get ready for your plunge into investment property here in Sacramento, CA, we can help. Contact Professional Mortgage Associates, and we can go over your financials and see what kind of loans are appropriate for the property investment goals you’ve set for yourself, and the assets you currently have available to put in play.