How do you know when it’s time to upgrade from first-time homebuyer to first-time investor? What makes a sound investment? Answers to these questions and more!
Even before begin looking at potential investment properties you need to have a solid grasp on how much money you have, how much you’re willing to spend. Although you may have $50,000 in cash for an investment property, the homes in that price range will not equate to dollar signs unless you put some money into them. With that being said, it is important to assess who will be doing any renovations and how much money that will cost. It’s ALWAYS more involved than going down to the store to just pick up a few things.
Next you want to calculate your initial costs plus renovation costs and what the resale or rental value will be. It is particularly important at this stage to be realistic in market values what the neighborhood in which the property is located can support. Although a 3 bedroom/2 bath home on street A may go for $180,000 the next street or block may not merit the same price, ESPECIALLY in Savannah. It is important to not build outside of what the neighborhood can handle.
The final assessment you want to make is of yourself and how you want this experience to play out. There are a few options for investment properties, which can set you up for a short or long term plan. Depending on the initial assessment of the property and area then comes time to decide to either rent or flip. Do you want to be a landlord and collect rent on a monthly basis? Is the property zoned for short-term rentals? Will you hire a property management company to take care of it for you? Or will you try to resell or flip the house for a profit?
All of these questions need to be evaluated and answered on the road to first-time investor success. No one wants to be a Negative Nancy, but it is important to consider worst-case scenarios. How long will you be able to sit on a vacant property if it doesn’t rent or sell? It is crucial to have an understanding of where you will be financially after the property is purchased.
Doomsday prophecies happen but are not the norm or no one would be doing it. It’s important to know your limits, understand risks and to make a plan of how to reach your goals. Savannah is rife with opportunities for first-time and seasoned investors alike. Start at the beginning and take it one step at a time.