Buying your first Berkeley investment property can be pretty exciting, especially if you’re planning to grow a successful and profitable investment portfolio. It can be stressful, however. Even experienced real estate investors get anxious when it’s time to find the right property, negotiate the best deal, and close on the final details.
When you’re buying your first investment home, surround yourself with professionals who understand the market, the financing, and the investment potential that’s involved.
Everything starts with your investment goals.
Identify Your Investment Goals and Look for Properties that Fit
When you’re investing in real estate, you need to know what you’re looking for and why. Are you looking for a home you plan to live in yourself someday once you’re retired? Do you want to rent out a property for a few years or a few decades? Are you diversifying an investment portfolio or beginning a new career as an investor?
You need to understand and identify your own investment goals before you identify a property.
Some investors will want a property that makes an excellent short-term vacation rental. Others will want a home that’s likely to appreciate in the long term. If you don’t know why you’re investing and what you’re looking for, the process will be far more stressful than it needs to be.
Prepare to Invest in Renovations and Maintenance
Many investors become stressed quickly when they buy the wrong property.
For example, a cheap property that needs major renovations can quickly become a nightmare.
Buying low-cost homes that need work is one strategy, but if you’re already feeling anxious about the market and your investment, don’t waste time and money on homes that need a complete rehab. It will likely lead to a delay in getting your property onto the rental market. While the prices are certain to be attractively low, the amount you’ll have to spend to get that property into rent-ready condition may be more than you expect.
Do the Math so You Know What to Spend and Save
Make sure you’re aware of the financial requirements of the investment. You’ll need to estimate your income and expenses before you buy. Make sure those numbers fit into what you need and expect from this investment.
Decide what’s going to work for you in terms of cash on cash return and cap rate.
Run the numbers across several different scenarios. For example, what if you have a longer than expected vacancy and you don’t have rental income for a while? Suppose you need a new roof five years in? How will your cash flow be impacted by preventative maintenance work like HVAC servicing, pest control, and even landscaping? These are things you need to factor in when you’re determining what you’ll earn and spend on a Berkeley investment property.
Professional Berkeley Property Management
Another important tip to consider when buying a Berkeley investment property is that you can have more success when you partner with a professional property manager. A good property management company can help you have a better investment experience. You can rely on a property manager’s local expertise and knowledge to estimate the amount of rent you’ll earn and the amount of time it will take to find a great tenant.
A good property manager can also discuss what kind of cosmetic or functional repairs and updates will be needed before the property you’re considering is ready for the rental market. Don’t wait until you’re ready to rent the property out to consult a property manager; find out what you need to know before you buy.
We can help you buy your first investment property. Please contact us at California Pacific Realty, and we’ll be happy to make this process less stressful.