Buying Your First Investment Property


Stocks and bonds go up and down, but real estate is forever, they say. And it’s true: A wise real estate investment can provide steady income for years to come—provided you know what you’re doing and what you’re in for once you close the deal.

Cost of ownership. Just like your home, the cost of ownership for an investment property goes far beyond the monthly payment. Upkeep—ESPECIALLY for a rental—must factor into your budget. Whether you’re talking about commercial office space, a single-family home or a four-plex, you will face your share of monthly upkeep costs. You name it—bathroom faucets, squeaky doors, new flooring, patching holes in walls—and it will come up. Factoring that into your rental costs without driving yourself out of the market is something you must consider seriously before buying the property.

In addition to upkeep, give serious thought to the taxes, and especially the trends, in the municipality you’re thinking about buying property in. Do they just keep climbing, or are they holding close to a steady line? Know what you’ll be in for three years down the road, because it’s possible that acceptable rent increases won’t keep up with the tax bills.

Finally, factor in the neighborhood. If you’re looking for a good value on your property, then ask yourself if property values are rising steadily in that part of town or if they’ve plateaued. The value of your investment will depends heavily on its location, and hence your ability to attract renters and sell for a good price when you’re ready to cash in.