Real estate is one of the most profitable investments you can make. Owning an investment property diversifies your portfolio and may provide you with significant financial gains. Before making the investment, consider the following factors.

What Factors Matter Most When Buying an Investment Property?

1. Your Financial Capacity 

Aside from the actual cost of the investment property you are eyeing, further expenses like renovation, advertising, and operation costs must be factored in when planning your first purchase. Assess your current financial situation by calculating the money you have and what you can borrow to decide the range of properties you can afford. Keep in mind that unlike buying a home for yourself, which often requires a 10% down payment, this investment demands a bigger financial commitment of a 15% to 20% down payment.

2. Location 

For investment properties, choosing a strategic location is crucial. Since tenants will be renting out the property, ensure that the neighborhood you choose is safe and has a low crime rate. In addition, depending on your target market, seeking the location that fits their demographics can help ensure that your property will be in demand, generating a steady flow of income. For example, if you are hoping to rent to families, choose a location with a well-regarded school district, a playground for kids, and a friendly neighborhood. 

3. Property Management

Buying an investment property could mean taking on the role of landlord, which requires a significant amount of time and effort to keep your operations running smoothly. If you don't have the time to fulfill this role, consider hiring a property management team to do the job for you. They will take care of maintenance and rent collection, among other tasks. 

If you're ready to purchase your first investment property, trust Teresa Tatum Properties- Keller Williams Realty to help you with the process from start to finish. Based in Ringgold, GA, this real estate agent assists buyers in Chattanooga, TN, and the surrounding areas. Teresa takes a client-first approach, whether working with a buyer or a seller. Learn more about this agent online or call (706) 463-1728 to request a consultation.