You’re Investing In A House Not Buying a Home
Smart investors don’t buy property because they envision themselves living in it, they invest in property to turn a profit. That process requires discipline. The decision of whether to place a bid or pass on a property needs to be clear cut. Assess the financials, numbers don’t lie. Remember, you’re buying a house and renting your tenant a home.
Here’s why.
The Investors Eye
When you’ve found a property that you’re interested in, don’t get too concerned about fixtures, the cabinets or the color of the walls. As an investor, you have no plans of ever moving in, so it doesn’t matter if you like the kitchen tile. The questions you should be asking yourself are, “What kind of tenant can I expect to rent to?”, “How are my new tenants going to feel living here?” or “Is the layout functional or will I need to make major renovations?”
Patience Is A Virtue
Like many investments, the real money is made the day they’re purchased, by buying smart. If you underpay and buy a property at a reasonable price, you’ve already locked in your profits. Overpaying for a property just because you like it or because you had a gut feeling, will burn you more often than not. It’s really quite simple if the property will generate the income stream you need, then it’s a good buy. Otherwise, let it go and continue your search.
How Should You Remodel
You like cherry wood floors and marble countertop, who cares? Remember, you’re not building your dream home. Let “neutral and practical” be your friend. When remodeling, choose designs that will appeal to your target market. You want your tenants to feel like it’s their home, not like they’re living in someone else’s house. Your goal should be making improvements if and only when, they add value to the property.
There Are Lots of Fish in the Sea
There is no such thing as the one perfect property. You will come across many properties in your search that will fit your parameters. Don’t get emotional about the one that got away. If you find yourself having to justify the reasons why you should buy, then it’s probably best to walk away. If financial analysts are predicting a boom or there’s too much interest in a property on your list, there’s a good chance that emotions will intervene and you’ll end up overpaying. You don’t want to get up in the hype.
Don’t rush out and buy something you like if it doesn’t fit your budget or long-term plan. Set financial goals for yourself and stick to them. Whether you’re bidding at an auction or competing with other interested parties for a property that fits your parameters, know your limit and hold firm. Properties are like buses, if you miss one, another will come along soon enough.