The first thing you must bear in mind is that real estate is always a wise investment when you’re trying to determine what makes a good investment property. While it may appear that there is an overabundance of available real estate now, remember that after a recession those properties will be in high demand again. And the market will change again. It invariably does. And since there’s only so much usable land on the earth no matter what piece of property you want to buy someone will eventually want to buy it from you when you are ready to sell. The key though, to determining what makes a good investment property, is not to think about making a profit after you sell the property, you need to make your profit when you purchase it.
Buying investment property is totally different than buying a home for you and your family to live in for the next twenty or thirty or years. When you purchase that home you look for sure amenities – a backyard for the children to play in, an extra bathroom and a guest bedroom, a den or family room, new appliances, etc.
However buying a home is more often than not an emotional decision. You find a home that your family likes first and then you worry about the monetary details. You walk into the place and say, “Yes! This is the one!” and THEN you look at the roof and the pipes under the sink and check the basement for leaks. You’re not the least bit concerned about how much you may be able to resell that house for because you plan to live there for years so you purchase it for the best price you can get and move in. You’ll worry about making a profit off of it if and when you choose to sell it.
But you are going to be in big trouble if you buy that investment property along with your heart rather than your head. With investment property you cannot always count on someone who makes even worse choices than you to come along and buy that property at a high enough price for you to make a profit. Therefore you need to buy it for a low enough price to begin with. There are a lot of things you need to consider to determine what makes a good investment property.
One thing that you need to consider is how long you plan to keep the property. You could only have to make a few minor repairs if you’re only planning to have it for 5 years. And patching a roof or repairing some plumbing pipes are tax deductible. However if you intend to own the property for twenty years you already know that during that time you are going to in all probability have to replace the roof, replace the plumbing and replace the appliances at least. None of which are tax deductible and if you want to recoup that investment you’ll need to be able to get it out of the sale of the property. So the length of time that you plan to own the property is just one of the numerous decisions you’ll have to make in order to determine what makes a good investment property.
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