Your real estate purchase could be the best investment of your life or the biggest mistake of you’ve ever made. While there’s no guaranteed way to spot a good investment, there are several signs that your purchase is a financially savvy one. If your investment meets the following criteria, it could be a smart choice.
1. It Meets Your Goals
Everyone who plans on making a real estate investment has a goal or objective. Before you buy a property, ask yourself if the property will allow you to meet your goals.
For instance, you may want to make $500 a month more than the mortgage in rental fees. If your property is in an area that has low rents, you won’t be able to meet your goals. Similarly, you might have the objective of flipping a fixer-upper. If the home is in an area that is undesirable and has a stagnant real estate market, it’s probably not the right investment.
2. The Local Market is Growing
No matter what your goals are, you should be certain to only buy a property in a growing market. Otherwise, your investment could lose you money or take years to turn a profit.
That said, the market doesn’t need to be thriving. You can look at trends in home sales and rent prices to learn whether or not the market is stagnant or growing. Although it may not be thriving yet, a steady trend of growth shows that it may be thriving soon. Buying before the market hits its peak means that you can get a property at an affordable price.
To determine how a real estate market is doing, look in the local newspaper. If there are many new jobs in the area, there’s a chance the market is doing well. Find out if there are new plans for infrastructure and gather the census information for the most recent years.
3. You Can Find an Experienced Property Manager
If you want to save yourself some work, you need a property manager for your building. Although a property manager isn’t a requirement for your property, having one could save you time and prevent complications.
If you fall in love with an investment property, start looking for a property manager before you decide to make your purchase. Find out what qualifications local managers have, how much experience they have, and what they charge for their services.
In an effort to find a property manager, you need to ask the locals. Talk to realtors, accountants, and lawyers. If they don’t have any recommendations, look online. Be sure to do reference checks on all of your potential candidates. Avoid buying a property in an area with no experienced or affordable managers.
4. The Area Has Low Vacancy Rates
A final sign of a good investment is low vacancy rates. If you buy a property in an area with high vacancy rates, your property could sit unoccupied for months or years at a time.
In 2016, Miami had a rental vacancy rate of 6.5%. This means that there is a good chance that your property will be occupied. The area is growing quickly, and there are only so many properties available.
If you’re looking for a real estate investment that checks all of the boxes, you should here. South Florida is expanding rapidly and has some excellent opportunities for eager investors.