Buying an Investment Property

My Investment Property

You’ll find information here to help you whether you’ve invested in property before or this will be your first investment property purchase.

Determine an investment strategy.

First, determine what type of investment strategy suits your needs.

Buy to hold

With this strategy, you will rent the property out, either indefinitely or for a while, before living in it yourself.

Buy to flip

Flipping involves buying a property to sell it at a higher price.

Consider these factors.

When buying an investment property, you will have many of the same considerations
that you would have with a home purchase, but also have additional topics to think about.

Planning

Planning

  • Strategize for the long term, including an exit strategy. Have a back-up plan in anticipation of unexpected turns in the market.
  • How much and what type of risk are you willing to take on? Do you need an investment return right away? You may want to explore these questions on your own or with an advisor.

Location

Location

  • Pay attention to the surrounding neighborhood, just as you would when searching for a home or vacation property.
  • Do your research. In addition to the basic strategies of buying any property, be sure to research local vacancy rates.

Finances

Finances

  • Consider the advantages of a fixed rate mortgage. Set payments can make it easier to calculate your risk and future return.
  • Understand your amortization terms and how the length of the loan you choose may impact your overall investment plan.

Additional costs

Additional costs

  • Have cash available. Loans for investment properties often involve meeting different lending requirements than those for a primary home. For instance, you may need a larger down payment or have to pay a higher interest rate.
  • Some costs associated with an investment property may not carry tax benefits. Speak with a tax advisor to thoroughly understand these costs.
  • Factor in the costs and time commitment of property management, as well as handling phone calls, emails and other details involved with dealing with renters.
  • Weigh the pros and cons of dealing with renters yourself as compared with using an agency.

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1All loans are subject to credit review and approval. Rates, program terms and conditions vary by state and are subject to change without notice.

The information described herein is for educational purposes only and does not constitute and is not intended to be viewed or construed as professional advice. We recommend that you seek professional advice with respect to your specific situation.

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