As a real estate investor, you have a lot of options to choose from in Metro Detroit, Michigan, so how do you choose your next investment? Here are 6 things to look for in your Metro Detroit investment property.
First of all, you have to look for the affordability of the investment property. Right upfront, you have to be able to afford the purchase price, whether you are paying in cash or need to obtain a loan. If you are paying in cash, you need to make sure you have enough to cover the purchase price and any closing costs or association or transfer fees to purchase the property. You then need to make sure that if there is an association, you can afford to pay for the association fees if you are not collecting rent right away. If you are obtaining a loan to purchase this property, you will have to do some research to find a lender that is willing to originate for an investment property. Keep in mind that it is more difficult to find a loan for vacant land than a residential building.
The next thing to look for in your Metro Detroit investment property is the demand. If this is a rental property, make sure the market is not already flooded with rental properties available. If it is, then you might have to offer lower than market rent to get a renter in quickly. If the rent for Metro Detroit is relatively lower than other areas, there may not be as much of a demand for that type of property. If it’s relatively high, then that property is in high demand or a nice area and might be worth the extra money for the property. You do want to make sure your property can bring at least market rent for dependable return on investment.
Another important thing to look for in your Metro Detroit investment is the property’s curb appeal. You want to make sure it looks clean and well taken care of. No one wants to live in a dark, messy depressing house. It needs to be freshly painted and possibly have the landscaping redone. If you can find an investment property with this already taken care of, that’s a great savings! If not, you will have to budget a little extra money to make sure the property is in tip-top shape.
An extremely important thing to look for in your Metro Detroit investment property is the structure of the property. This is where an inspector comes in handy. They are specially trained with specific equipment to identify any structural issues with the property. If you are taking out a loan to purchase this investment property, the bank will most likely require an inspection to make sure they are placing their funds in a solid structure.
Something else to look for in your Metro Detroit investment property is something that makes the property unique. For some, it could be an interesting waterfall into the pool, or maybe a repurposed table turned into a back porch dry bar, or a cluster of fruit trees on the property. All of these special features can make potential renters or buyers fall in love with the property and want it to be theirs.
The most important thing to look for in your Metro Detroit investment property is the exit strategy. You must plan ahead. Study the trends of the area and make sure you understand if there is a dip or growth coming. If people begin to migrate out of the area to a different area, you need to get out of that investment, the market rent might start dropping to attract new renters. If property values start dropping too much, you may need to sell your investment. If you personally enjoy the house, you might want to think about retiring there!