Buying your first investment property can be a liberating, exhilarating experience for sure. However, for the uninitiated, buying or selling your first home can also be an intimidating proposition. Today Karen Bail would like to share her very best tips for the new investor to make sure you maximize your investments – and minimize any potential heartache down the road. Let’s get to it!
Investing to Suit Your Purposes
To begin with, it’s vitally important to think about the outcomes your investment will be working toward as you prepare to potentially enter the real estate investment game. Are you looking to break into the short-term or long-term rental market? Perhaps you want to buy a home to spruce up and resell at a profit in Hawaii’s ravenous seller’s marketplace. Or are you looking to start up a portfolio of houses and condominiums? Keep in mind the Big Island’s market conditions are always changing, so you’ll want to give plenty of forethought as to your ultimate goals before diving in.
You Know What They Say…Location, Location, Location!
It’s important to consider where your potential property is located in order to truly assess its long-term potential. The Big Island is home to so many unique neighborhoods – not to mention many of the world’s sub-climate zones – that will have a tremendous impact on both your home’s future value and its potential to grow. After all, if you were primarily interested in marketing your home as a future rental for the beach-going crowd, then you probably wouldn’t want to invest in a home in the Hamakua region, which receives almost 90 inches of rain per year!
Getting Your Financial House in Order First
After you’ve considered the type of investments you’d like to make and the best areas of the Big Island in which to make them, it’s time to make sure that the financials are secured and ready to go before you close any deals! Buying and selling houses is about a lot more than money, after all – there are a number of considerations to ponder, financial and otherwise.
For example, if you’re thinking about starting your own real estate portfolio, then you’ll likely need to weigh whether or not to create an LLC, or limited liability company, to make sure your personal assets and your real estate assets are kept separate. This will make sure that your personal finances remain protected from any potential litigation that could arise, not to mention the tax benefits that an LLC can give you each year when
From there, you always want to make sure that you’ve got enough cash on hand to work with – and not only for the down payment, but for all the requisite closing costs as well! If the property you’ll be buying is to be used as a vacation rental, then you’ll want to make sure to budget enough money for the necessary upkeep and repairs to keep the place looking its best. We’d also recommend keeping at least six months’ worth of property income on hand at any given time for unexpected, prolonged vacancies – a lesson the pandemic sadly taught many real estate investors well.
Finally, if you’re looking to eventually sell the property to turn a profit, then you’ll need to be prepared to carry along the mortgage loan yourself for the amount of time it may take to complete all the repairs and eventually sell the market to its new owner(s).
Have more questions? Ready to Get Started? Then Give Karen Bail a Call!
Buying your very first investment property can be an exhilarating experience, but it can also be filled with anxiety if you’re not quite sure what to expect. If you’re ready to get in the game, then give Karen Bail a call and let’s get to work on making all your island dreams come true. Aloha!