Questions To Ask Yourself Before Investing In Real Estate
Questions to Ask Yourself Before Investing in Real Estate
Nicole Serviss, RE/MAX Elite
Short but sweet list of questions you should ask yourself before you invest in real estate. I have an easy printable version. Just click the button to download.
What type of property are you interested in (single family or multi-family)?
There are pros and cons to owning a single family home, a condo, or a multifamily unit for the purposes of investment. You’ll want to decide upfront what you are looking for.
What area are you interested in?
This question is important to answer when you are thinking of the type of tenant you want as well as the decision to self manage the investment or to hire a property manager. You probably want the property to be local if you plan on self managing.
Is there a particular type of tenant or renter you want to attract?
Are you in a military area? College town? Vacation town? Decide what type of tenant you want to attract so your agent can help you find the right property for that type of tenant.
Is this your first real estate purchase?
Real estate is very unique, and the investment process is a little more complex than if you were to be buying for yourself.
What prompted you to invest now?
Is the reason a good one to jump on this right away or would it be better to wait?
Will there be others involved in the investment?
This is important to talk through with your CPA, Realtor, and Lender so you know what type of ownership you will be taking with the property.
Are you looking for a profit in the future or additional income in the present?
The will help you determine what kind of return on your investment you are looking for. Ask yourself how long you plan on holding onto your investment too. This will help you determine the type of profit you are looking for.
What is the source of your current income? What assets do you have?
How secure is your financial situation? If your investment were to remain vacant for a few months, would you be okay?
How do you plan to fund the investment?
Will you be borrowing the money from a bank or paying cash? How much do you have for a down payment. Typically you need a minimum of 25% down for an investment.
Do you have a business or financial plan?
How does this plan to purchase an investment property fit with your plans?
What is your current tax liability?
Chat through this one with your CPA.
Will you self-manage the property or hire a management company?
This will help you determine where to search for your investment. Sometimes it’s just easier to pay someone else to manage it, but that can also eat at your profits. Decide what is most important.
Fill in the blanks.
My goal is to _______________________________________(priority)
by investing in a _____________________________(type of property)
that will yield _______________________________________(% or $).