Purchasing a second investment property can be a great way to diversify your portfolio and potentially increase your income. However, there are several key steps to take before making such a big financial decision.
Research the market: Before purchasing a second investment property, it is important to do your research on the local housing market. Look at factors such as median home prices, rental rates, and economic trends in the area. Understanding the market will help you determine the type of property that will be in demand and what to expect from your investment.
Determine your financials: Consider your current financial situation, your income, savings and debts, and any other financial obligations that may affect your ability to purchase a second investment property. Create a budget and a plan for how you will finance the purchase. It's important to keep in mind that owning a rental property comes with its own set of expenses, such as repairs, insurance, taxes, and property management costs, so make sure you are financially prepared to handle these.
Consider property type: Decide on the type of property you want to purchase. A single-family home, a duplex, or a multi-unit property may all be viable options, depending on your financial situation, your goals and the local market.
Look for a good deal: Once you've determined your budget, you can start looking for a good deal. Consider properties that need some TLC, and that can be purchased below market value. Such properties can generate higher returns after renovation or rehabilitation.
Hire a professional: Consider hiring a real estate agent and a property manager to help you through the process of purchasing and managing your investment property. A good agent can help you find the best properties, while a property manager can help you maintain your property and find tenants.
Do your Due Diligence: Before making an offer, inspect the property thoroughly and make sure to do your due diligence. Check for any issues that could affect your ability to rent or resell the property, such as zoning laws, water or structural issues. Get a home inspection and consider hiring a lawyer to review the purchase agreement.
Purchasing a second investment property is a big step, but with the right research and preparation, it can be a great way to diversify your portfolio and increase your income. It's important to take your time and consider all the factors before making a decision. With the right property and a solid plan in place, your second investment property can provide a solid return on your investment.
DISCLAIMER
​​​​The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.