Finimpact

Frequently Asked Questions (FAQ)

How do I know I’m ready to buy an investment property?

In general, you will know that you are ready to buy an investment property when you:

  • Have a reliable source of income and are well-established financially

  • Have enough free time to manage your investment property

  • Have saved enough money for the down payment

  • Can tolerate the risk associated with real estate investments

How do I know if a property is a good investment?

One commonly used formula to determine whether a property is a good investment is the
“1 percent” rule. The rule states that the property’s monthly rental income should be at least 1 percent of the upfront investment, including the purchase price and any initial renovations.

For example, if a property costs $400,000, it should provide rental income of at least $4,000 per month.

What should I look for in an investment property?

Here are a few things to consider when searching for an investment property:

  • A good location: An enticing location is key to receiving a great return on investment, as it determines the quality of your renter, the amount of rent you can charge, and the vacancy rate you are likely to experience.

  • Low maintenance: Some investment properties require more maintenance than others, such as student or vacation rentals. In addition, properties in lower-quality areas tend to have higher turnover rates. Look for low-maintenance properties that are likely to attract long-term, stable renters.

  • The potential to appreciate: Look for a property that will appreciate in value on two levels: when you buy and when you sell. When you purchase the property, you might be able to charge more rent by doing a few cosmetic updates. In addition, a property in an up-and-coming area will appreciate more over time so that you can make more money when the time comes to sell.

How should I finance my investment property?
Investment property financing can come from several sources, such as traditional bank loans, private loans, or home equity loans. You can even use online financing platforms like Lendio to get matched with the best lender and loan product for your goals in the modern age.

About the Author

Tetiana Sitiugina-Babiuk

Independent writer and content strategist

Independent writer, content strategist, and financial sector specialist. Tetiana Sitiugina-Babiuk is an independent writer and SEO strategist helping a broad range of international clients to convey their stories for over five years.

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