Avoid These Common Mistakes When Buying a Home as an Investment
If you're buying a home with plans to live in it indefinitely, you may be considering how its location, size and features fit your own lifestyle, without much thought as to its potential resale value. However, if you're thinking about buying real estate in order to resell it, you need to think about its potential value to other homebuyers and not if it fits your taste in particular. Note a few mistakes to avoid when buying a home as an investment so you know your purchase will eventually earn a nice profit when you are ready to sell.
Going it alone
To ensure your investment pays off, have a real estate agent, real estate attorney, inspectors, appraisers and a lender on hand before you even begin shopping around. The real estate agent can reduce the time spent shopping for potential purchases, the attorney can ensure you understand any risk factors for purchasing a home that may need repairs, and an appraiser can note the price you may expect to get when you're ready to sell. Trying to invest in real estate without all these needed professionals can mean expecting too much by way of resale value or losing out on a purchase because you didn't have a lender in place before you started shopping for homes.
Not checking out the neighbourhood
If you're buying a residential home as an investment, you also need to check out the neighbourhood. Is the neighbourhood fitting for a family, meaning that it has a nearby school or schools, public parks, convenience stores and other features that a family would want? Is it too close to an industrial complex so that there is a constant noise nuisance that would make the home less desirable for families? If the home is actually a condominium or something meant for singles or couples, are there nearby restaurants or hot spots that couples would enjoy? These factors can affect the saleability of any home, so be sure to check them out along with the potential home purchase itself.
Not considering other exit strategies
If you buy a home to resell, what if it doesn't sell? If you buy a home to rent, what if you cannot find tenants? You need a Plan B or secondary exit strategy to ensure your cash flow after a residential home purchase, whether that's renting it out, selling it if you cannot find tenants, petitioning to change zoning laws so it can work as a small office, and the like.