So you want to buy investment property...

Ahh the allures of investment property. Collect a monthly income, hold the property for several years, sell the property and make a lot of money! While it is that easy, it also is not that easy. Deciding which investment property to buy can be difficult. Here are three items to consider when looking at investment properties.

1) Residential or commercial? This is really your first decision. Residential has much smaller monthly rents, but may be easier to find financing for as a new investor. Commercial has a higher return, but also a higher purchase price. Once you've determined residential or commercial, your next step is the type of building. If you are looking at residential, do you want single family homes or duplexes or apartment complexes? Condos or townhomes? If you choose commercial, are you interested in a small shop or set of shops on a quaint downtown street, or do you want a big office complex with multiple companies? The choices may be overwhelming, but they do make the rest of the process easier.

2) Risk tolerance. Basically, this means how much can you stand to lose? Investment is never a sure thing. Real estate investment is no different. However, you can still invest whether you have a low tolerance or a high tolerance. It's all in the choice of property. If you prefer a safer return, than a nice home in a good neighborhood with a good school district is a good bet. A family is likely to want to rent the home for a long time to keep their kids in the same school. If you can tolerate more risk, than maybe a decent apartment complex in a so-so neighborhood with rumors of redevelopment is better for you. If the redevelopment plans go through, the neighborhood gets better, the rent goes up, and the potential sale-price goes up. But the redevelopment plans could also die, and the neighborhood will stay the same or get worse, meaning your rent will decrease and resale value decline. Figuring your risk tolerance will help a lot as you consider your property options. 

3) Location, location, location. No one really knows where that phrase came from, but it is really important. Once you decide what kind of property you are interested in, and your risk tolerance, you need to choose where to find that property. A cute shop on a quaint downtown street will only make you money if that downtown street is actually a popular destination. Obviously, good locations cost more, but there are some diamonds in the rough. A lot of downtown areas are trying to revitalize, meaning they want to attract new business and new customers to the area. They can offer incentives for establishing there. A community with a good reputation and a good school district is going to garner more rental income than a community that is in decline. There are plenty of people trying to get out of houses right now, so if you are looking to buy residential real estate, you can find at least one (if not two or three) houses on the street of your choice in the area of your choice. A good real estate agent is vital in searching out that perfect property.


Provident Property Management wants to be your management team. No matter your location, your risk tolerance, or your preferred type of rental property, we will work our hardest to get you the most money out of your property. We will keep your property filled and your pockets full. Contact us for more information or check our pricing page to see how we compare to other companies.