Buying your first investment property comes down to one idea: spend as little as you sensibly can and earn as much as the property will support. Whether you plan to fix and flip or build from the ground up, a few basics decide whether a deal is worth a closer look.
Here are three things to check on every property before you run detailed numbers.
Location
Location drives the appraisal, and it’s the one thing you can’t change after you buy. Look at the neighborhood the way a future buyer or tenant would:
- How are the schools?
- Are shops, restaurants and transit close by?
- How does this house compare with the others on the street?
- What have similar homes nearby sold for in the last few months?
A modest house in a strong location is usually a safer bet than a great house in a weak one.
Space
Next, look at how much room you’re getting, inside and out. Square footage matters, but so does how it’s divided up. Are the bedrooms a usable size? Is there a yard? Is the lot big enough to add on later?
Try to match the space to what buyers in that area are looking for. A four-bedroom house fits a family neighborhood. It may be a harder sell in an area where most buyers are single or downsizing.
Features buyers ask for
Then there are the features that show up in listing searches. How many bathrooms are there, and are they full or half? Is there a garage, and how many cars does it hold? Is the basement finished?
You don’t need every one of these on day one. Some can be added during a renovation. What you need is a clear idea of which features buyers in the neighborhood expect, so you can either buy a property that has them or budget to add them. Our post on home renovations for resale covers which upgrades tend to pay off.
Get a second opinion
These three checks are a starting point. There’s plenty more that goes into evaluating a property, including the repair budget, the timeline and how you’ll pay for it all. If you’re weighing strategies, our comparison of REITs, buy and hold, and fix and flip is a good next read.
When you’ve found a property you like, talk to a lender early. Sachem Lending finances fix and flip and new construction projects, and we’re happy to look at a deal with you. Contact us to get started.
