Buying your first investment property in San Diego is an exciting moment. However, since it’s usually an expensive venture, you want to make sure you get it right. Often, the process of finding, buying an investment property, and managing it is more complex than people initially expect, opening them up to mistakes. Fortunately, with a bit of planning, you can avoid missteps.
If you’re getting ready to make a purchase, here are some tips for buying and managing your first investment property in gorgeous San Diego.
Financial Considerations for Purchasing an Investment Property
Buying an investment property is a multi-faceted process. While launching a property search is likely the fun way to begin, it isn’t where you should start. Instead, you need to take a close look at your budget. The median house price in San Diego is around $975,000. While that may work for some investors, it’ll be far above what others may want to spend.
Along with inspecting the property and examining the City permit records for potential red flags, make sure you are working with an experienced Real Estate agent that knows what to look for to ensure everything is in good shape and in order. Working with a Real Estate agent that actually has bought and sold investment properties of their own can be beneficial to you as the investor. They will know all of the intricacies involved in making this kind of purchase and will be able to better assist you through the process.
You will also need to decide how you will buy the investment property. Buying an investment property in your name is a lot easier than buying it in a company name, which is why many newer investors choose this route. If you are planning on buying an investment property under a company name, you will need to register as a business before you move forward with the purchase. You’ll want to weigh the pros and cons of each option to ensure you’re making the best move, as each approach has its own benefits and drawbacks.
In any case, you’ll want to determine what you can afford to spend. Usually, you’ll want to compare the price to its potential long-term value. For example, you will need to compare the cost of the property – including insurance, interest on loans, maintenance, and other expenses – to the potential rent price. That way, you can see if you’d earn enough to make the investment worthwhile.
Lastly, set aside money to market your property. Fortunately, there are many free and low-cost ways to spread the word. For example, set up social media accounts that feature your property and provide visitors with videos and pictures to get them interested. You can even utilize free tools to streamline the process; look online for apps that allow you to customize and edit Instagram posts using pre-made templates. This way, you can effectively market your property — and save time and money.
Choosing the Right Investment Property
When selecting investment properties, you need to look beyond what you’d like to see if you are going to use it. You make it a more attractive option by factoring in what renters want to see in a property. In turn, charging a higher price or finding a renter faster may be options.
Now, approximately 44.1 million people in the US are renters, so you likely can’t please them all. However, you can appeal to the widest number possible by focusing on popular features.
First, you want to make sure the property is in a great location. The more desirable the neighborhood, the easier it is to set a higher rent price and find a qualified tenant. After that, you need to look at the basics. Room for parking and access to public transit are must-haves for many renters, as well as a reliable heating and cooling system. Having outdoor space makes a property more appealing to families with children, gardeners, or dog owners, while storage is universally appreciated. Maybe buying a Duplex property for the first purchase is the way to go.
Managing Your New Investment Property
Once you move forward with an investment property, you’ll have to decide how to manage it. Usually, that means choosing between functioning as a landlord or hiring a property manager. With the former, you’ll keep your costs down. However, you’ll spend far more time and energy than if you go the other route. Along with advertising your property, you’ll need to screen tenants, manage contracts, collect payments, schedule maintenance, and handle any issues that arise.
If you hire a property manager, you can be less involved. The property manager will handle all tenant and property issues on your behalf. However, you’ll have to pay for the service, making your investment less profitable. Which option is ideal depends on your lifestyle, available time, and overall interest. Both approaches are viable, so choose the one that works best for you.
Buying and managing your first investment property can seem scary, overwhelming, and stressful — and, on occasion, it is. However, don’t let that scare you away from what can be a rewarding experience. Take your time, do plenty of research, and ask for help when and where you need it. Before long, you’ll have this all down pat — and you can start looking for your next investment.
The McT Real Estate Group can help you find the right house for your first investment property in San Diego. Get in touch with us today by calling 619-736-7003.