The whole point of purchasing an investment property is to see financial returns that help to boost your portfolio and your bank account. Return on investment isn't always an easy thing to predict, and if you make a couple of wrong moves, you could end up in trouble.
Naturally, there are many variables that you must take into account when looking into investment properties, but researching ones that typically see the highest returns is a good place to start. Here are a few that often result in a positive ROI, plus some tips on how to find the right property for you.
Apartments or Multifamily Buildings
Apartment buildings and other multifamily properties can provide some great returns based on a handful of factors. Long-term tenants provide you with steady income month after month, and maintenance costs are usually more controlled in multifamily properties.
The fact that all of your renters are in one location is also more convenient. Most apartment complexes have all the same appliances and amenities in each unit, which makes them easier to repair or replace, plus the demand for apartments always seems to be steady and often increases in certain areas.
If you are investing in an area where real estate prices have skyrocketed as they have in so many parts of the country, then single-family rentals may be a wise investment option. Just because most people can't afford to purchase a home doesn't mean they don't want to live in one.
By renting, they can avoid a huge down payment, can have rent payments that are likely the same or lower than a mortgage payment, and don't have to worry about repairs, upgrades, and ongoing maintenance. They also don't need to qualify for a loan, which is a sticking point for many people. Like multifamily properties, a single-family property provides the possibility of long-term, consistent income.
Commercial real estate properties like shopping malls, retail stores, offices, or retail strip centers require quite a bit more research than multifamily or single-family properties. The location will be more of a factor with these types of properties, and there is usually a higher turnover rate when compared to residential properties.
With these kinds of properties, the sort of business that you are investing in plays a significant role in the potential return, as does your tenant's ability to run a successful business. As long as you take the time to do the necessary research and secure a loan that works to your advantage, a commercial property can provide reliable returns.
Tips to Help You Choose
Choosing an investment property is a business decision that should be made with a businesslike approach. Allowing emotions to take charge and guide your decisions may end up leading you in the wrong direction. If your goal is to find the investment property with the highest potential returns, then you need to be analytical and just let the numbers and common sense take control.
You must prepare to do thorough planning and research, use proven commercial real estate investment strategies, find properties that include income-generating assets, and work with professionals every step of the way.
The good news: our mortgage experts can help you get started! If you’d like to know if you qualify for a loan for your next investment property, visit InvestmentProperty.Loans and apply now!