How to Buy your First Investment Property

How to Buy your First Investment Property

Want to invest in real estate in Columbus, Ohio? If you’re not sure where to begin or what you should be considering, read these tips to start your successful real estate investment portfolio.

The Columbus Team’s Top 10 Tips for buying your first investment property:

  1. Ensure your financial house is in order
    Eliminate all debt if possible. School loans, credit cards, medical bills, and any other areas you may owe money. Not having all these bills allows you to save down payments for your investments faster. It also removes the financial pressure to help you make better, less emotional decisions throughout the process of the purchase.
  2. Save the down payment
    Save a minimum of 20% down. If this is an investment property, a minimum of 20% is required down before you can get a mortgage. If you can pay the entire cost in cash, you have a better chance of winning the contract in tight markets with limited inventory. Sellers will often take an all-cash deal that is less than one that requires lenders be involved. The more you save and pay upfront, the better your cash flow will be while you own it.  
  3. Start small.
    Consider investing in an affordable single-family home or duplex first. Keep your investment small so you can net returns faster from the rental income or sale, then take those profits and invest in your next property. Operating expenses and repairs are the most reasonable in this type of real estate. Purchasing multi-family units, commercial real estate, or apartment buildings require a more substantial investment and monthly operating expenditures.
  4. Establish your parameters.
    Know exactly the type of property you’re looking for. Choose the neighborhood, school district, and price point of the property you are targeting.
  5. Amass your professionals.
    To keep your profits in your pocket, it’s best if you have some repair skills yourself. You can save a lot of money by being able to replace a leaky faucet or repair drywall and paint. If you don’t possess these skills, you’ll have to source some affordable local laborers who can do the work for you. Keep in mind this will impact your operating budget. Drywallers, plumbers, electricians.  Forging relationships with these people and knowing what the charges are ahead of time will make your investment life easier. Add an excellent REALTOR who will be looking for potential investment properties that meet your criteria. S/he can also connect you with reputable service professionals when needed.
  6. Secure a loan, if required.
    Take advantage of any period of low-interest rates to use a mortgage when purchasing. A lower interest mortgage will keep your operating costs at a minimum and your profits at a maximum. Interest rates are slightly higher on loans for investment properties, so be sure to account for that in your budgeting.
  7. Plan for Expenses and Profits.
    Determine your financial break-even point and how much income needs to be produced to cover your expenses and turn a profit for further real estate investments in Columbus. Also, consider whether the property will need renovations before you can rent or re-sell it. With your first investment, you may not yet have the professionals you can count on in your contact list. You may best purchase a home that does not need immediate repairs or even consider a turn-key home with reliable renters already living there.  In a turn-key scenario, you will not immediately need to interview and vet new renters.
  8. Consider a partner.
    An investment partner may be an idea for cost-sharing and profit-sharing and may allow you to start investing earlier. Keep in mind that, like a marriage, a partnership’s success or failure depends on the commitment and shared goals of the people involved. Who you choose may simplify or complicate the process and outcome.
  9. Keep your emotions in check.
    From finding the right property to dealing with adversity in an income-producing home, you must learn to keep your emotions in check. From the purchase to negotiating with tenants and partners can be sidelined by emotions. You’ll need a cool head and a laser-like focus on your plan to keep your new business profitable.
  10. Evaluate Risk & Reward.
    Any investment has risk and potential for reward. If you follow your plan and don’t make decisions based on emotion, you will reduce your risk and increase your chances for financial reward.

Follow these tips, and before you know it, you’ll have purchased your first investment property and be looking for your second!

Central Ohio Homes Continue to be a Good Investment!

Home values continue to rise in Central Ohio and are currently 7.7% higher than the same time last year.  This is a good time to sell should you be considering a change of residence.  There are also more options for buyers as more property is available for sale.  Contact The Columbus Team for a more detailed update and market report for your specific area.  Read the entire Market Report below.

Central Ohio homes are a good investment

Central Ohio homes are a good investment!

(Dec. 19, 2018 – Columbus, OH) – Home prices continue to rise in central Ohio as the median sale price of a home sold from January through November 2018 was $195,000 which is 7.7 percent higher than homes sold during the same period last year. The average sale price for the first eleven months of the year was 228,062, up 6.1 percent from last year according to the Columbus REALTORS®.

The median sales price is the midpoint, where half the homes sell for less, while half sell for more. The average sales price is the total volume divided by the number of homes sold

“As REALTORS®, we are pleased that the statistics demonstrate real estate continues to be an excellent investment vehicle,” said Sara Walsh, 2018 President of Columbus REALTORS®. “Real estate investment offers a favorable alternative to the stock market and, in the current market, is a lower risk yielding better returns while offering diversification.”

“A home is more than just an investment, it’s shelter, a place to create memories as well as a place to build a strong financial future.”

Inventory levels in central Ohio have been rising over the last three months and now stand at just under 5,000, up over eight percent from one year ago. 

There were 2,207 residential homes listed for sale last month, which is five percent more than a year ago and the highest number of new listings for the month of November since 2012.

“Inventory levels have been at record lows in recent years, so the additional homes for sale have been a welcome change for local buyers,” added Walsh. “This solid housing demand, fueled by a growing economy and low unemployment, reinforces the health of the central Ohio market. 

Home sales were up slightly (0.6 percent) last month but were down 1.6 percent year to date (January through November). Homes in contract were down 8.0 percent. 

“Although home sales were up in November, we’re still trailing 2017,” added Walsh. “Given that pending sales were down eight percent last month, it’s unlikely that 2018 will pull ahead, in terms of home sales, by the end of the year.”

According to the latest Housing Market Confidence Index by the Ohio REALTORS®, 93 percent of central Ohio REALTORS® maintain that our local housing market performance has been as good or better than anticipated.

When asked what their buyer’s thought of the housing market this year, 48 percent believed it was an okay time to buy a home and 45 percent thought it was a good time to buy a home. 

Current housing report – November 2018

Columbus REALTORS® is comprised of over 8,300 real estate professionals engaged in residential sales and leasing, commercial sales and leasing, property management, appraisal, consultation, real estate syndication, land development and more.

The Columbus REALTORS® Multiple Listing Service (MLS) serves all of Franklin, Delaware, Fayette, Licking, Madison, Morrow, Pickaway and Union Counties and parts of Athens, Champaign, Clark, Clinton, Fairfield, Hocking, Knox, Logan, Marion, Muskingum, Perry and Ross Counties.