2. With the right information any investor can
profit by investing in cheap properties. But
remember you are making a long-term
investment. Property values tend to increase
over time, and acquiring tenants to help pay
down your mortgage while you wait to sell
makes this a valuable investment vehicle for the
future.
3. Know your home inspector
Home inspectors know the
building codes for your area
and can offer invaluable
advice about the integrity of
your property’s structure.
Not all home inspectors are created equal. Some
are qualified to perform WETT certification for
wood-burning fireplaces, others have the
training and tools to detect hidden moisture
issues, and some home inspectors are qualified
to offer only basic inspection services.
4. Be sure you know the scope of inspection and
be prepared to consult a second home inspector
and or other specialized professionals if you
require additional information.
5. Know your market
Your real estate agent can offer you a wealth of
advice on neighborhood markets. A market
analysis, sometimes called a
CMA or market evaluation,
includes information about
the market value of other
houses in the neighborhood
and how the property you are
considering compares to
your neighbors’ homes.
7. Prior to purchasing the property: This helps to
ensure that the current value of the property
and the surrounding area are considered during
the negotiation process.
8. Prior to renting the property: Remember, real
estate is a long term investment and knowing
the current rental value of the property can help
you recover your renovation cost – which is as
important as finding the right tenant to pay
down your mortgage.
9. Prior to listing the property for sale: This will
ensure that you are listing the property at the
right time. As an investor you want to buy low
and sell at a time when the property values are
high. Your real estate salesperson will let you
know if you are in a buyer’s or seller’s market.
Market evaluations can also be tailored to
include demographic information for the
neighborhood. This allows you to customize
your renovation plans accordingly.
10. Know which renovations add value
Your future buyers will be most impressed by
kitchen and bathroom upgrades, as will tenants.
So consider purchasing new appliances, putting
down ceramic floors and
adding stone countertops.
Renovations that save energy
costs, such as roof repairs,
windows and doors, add
long-term value for potential
tenants as well as for future resale.
11. Using the demographic
information for the
area, determine what
type of renovation
would be most valuable
for that market. If the demographics indicate
that the area is sought after by senior citizens,
then renovations to make the kitchen,
bathrooms and entry more senior accessible
would certainly be viewed as valuable.
12. Keep in mind, however, that there is a delicate
balance between the value of the renovations you
make and the renovations your neighborhood can
support. For example, doing renovations to raise the
value of your income property to $400,000 isn’t
advisable in a neighborhood with $200,000 homes.
With these tips in mind, your long- term investment
will work for you.
