Protecting your cash when investing in inexpensive real estate will ensure you have the financial backing to invest for decades to come. Depending on your market, there may still be a number of affordable properties in up-and-coming neighborhoods that are investment gold.
Whether you prefer to buy, renovate and keep the properties for rental income, or flip the property for a profit, you need to protect your investment throughout the process. Don’t skip initial steps of the project – like securing title insurance – because the price is lower than other investment properties you’ve purchased. It’s possible to make a large profit from properties under $100K, but you’ll need to use these tips to guard your money.
Location Is Still Key
No matter the price point, location is still the main attraction for property buyers and renters. Of homes purchased in 2018, 51 percent were located in suburbs and subdivisions. Protect your real estate investment cash by researching the market and determining where buyers are shifting their focus. The National Association of Realtors reports buyers purchased homes a median of 15 miles from the homes in which they previously resided, so stay close to well established neighborhoods.
Invest In Title Insurance
Title insurance protects you against any type of ownership issues on the investment property. Homes that are in distress or bought at auction could have hidden liens or levies. A reliable title company will search property records for any filing problems, like unrevealed heirs, forgeries, or filing errors. After the purchase, the company will protect your investment from any future issues that could arise with the title.
Get Eyes On Out-of-Area Properties
Investing in auction or out-of-state properties may mean you must act quickly and won’t be able to see the property in person. Do all you can to get eyes on the prospective project to make a smart offer. Request a virtual tour from the owner, ask an investment property to visit the property, or ask a contractor from the area to do a walk-through. Buying undervalued property is a good way to secure a profit.
Solid Home Inspection
Hire a reputable home inspector to thoroughly investigate the main components of the home – foundation, structure and roof. Have a partnering contractor walk through the property with you to estimate rehab costs. Keep in mind that homeowners in 2018 wanted move-in ready homes, as 36 percent of buyers wanted to avoid any renovations. So invest in properties you can afford to completely rehab and still make a profit.
Hire Reputable Property Manager
If you plan to keep the property in your investment portfolio to produce rental income, hire a property management group that specializes in similar properties. They will know the area, clientele, and processes of renting the property. Solid property management will help secure your investment and keep the property in good shape.
Investing in inexpensive real estate is a strong way to turn a profit or produce monthly rental income. Be sure you know what you are buying, get a solid idea of rehab costs and find a reliable property manager to maintain the property. Following these tips will help you make the best investments in low-priced properties.