First, consider what type of investment property is best for you and your family.
If you are thinking about a rental property, such as a vacation condo or rental home, consider how much time will be needed for things like maintenance, managing a website or rental listings, and vetting potential tenants. For rental homes, make sure the areas you are searching are attractive to tenants in terms of proximity to nearby business centers and transportation hubs, and in good school districts for family tenants.
Is a family vacation property more to your liking? Make sure you read any and all rules pertaining to owners and guests, as well as rules on renting your property out when you are not using it if that is something you plan to do. Also, be sure that your vacation property is somewhere you foresee your family wanting to travel to often enough to make it worthwhile.
For new house flippers, you want to find out what return you can expect to get in your market area and talk to contractors and suppliers to get realistic estimates on renovations, both in terms of price and time to completion.
Here are some additional Dos and Don’ts for investing in real estate:
- Do aim for at least a 15% return on investment.
- Do look for homes priced in the low end of the median price range.
- Do look for 3-bedroom, 2-bath single-family homes for rentals or flipping.
- Do focus on one neighborhood or area.
- Do purchase rental properties close to your home if you plan to manage them yourself.
- Do use one real estate agent to help with all your buying and selling needs. Don’t purchase a second property until the first is earning revenue.
- Don’t buy properties that you wouldn’t want to manage, even if you plan to use a property manager.
- Don’t buy a home that you cannot afford to carry for several months in case of a slow market.
- Don’t buy a home or condo without having inspections performed.
- Don’t buy without title insurance.
- Don’t buy more properties than you are able to manage.
Also, working with one agent allows that agent to learn your tastes, needs, and parameters, so I can be out looking for the right property while you are busy doing other things.