There are many benefits to buy investment property but it should not be done lightly. Do your due diligence and make sure you carefully think through your investment. That’s why we’ve created this “Six Step Checklist to Buying Investment Property In the Inland Empire” to help you.
Use this checklist as a resource if you’re buying in Inland Empire, a or throughout California.
Checklist to Buy Investment Property In Inland Empire
(For all investment properties in the Inland Empire)
What is the market you’re looking at? Look at the state, the zip code or wherever you’ll ultimately be investing, and the city. Can you buy properties affordably in those areas? What is the economy like in those areas? For example, if you’re buying rental property, are there a lot of renters? Is it a reasonable time to buy investment property in the Inland Empire?
Next, consider the property. What kind of property are you looking for? How will the numbers work out (i.e. can you acquire the property affordably and get a good return?) What problems tend to exist in certain cities or even specific zip codes of a city. (For example, some zip codes might be more prone to flooding; others might have unsteady ground that leads to cracked foundations… this might not stop you from buying the investment property but you should at least be aware of what the conditions are often like or part of a city may be a war zone such as parts of Ontario or San Bernardino.) Get a general idea of your answers at first and then refine your answers once you start looking at actual properties.
Think about what you hope to get out of the property. Is there a specific cash flow number you’re looking for? What’s the frequency of payment you need? What about appreciation? As with everything else in investing, there’s sometimes some give-and-take between what you need to give and what you can get for a return, but this is a starting point for you.
Think about what your expenses will be. For most investors, you might be looking at taxes (including property tax, school tax, etc). And, depending on how the deal is structured, there will probably be income tax. You may also have other expenses, like HOA fees, insurance, or property management fees. Depending on the age of the property your maintenance costs will vary. The older the higher they will be. You may want to consider upgrading some of the mechanicals of the property before a renter moves in to avoid that constant maintenance of failing systems.
Every savvy investor plans for contingencies before they acquire a property. For example, they think about what would happen if they need to sell, or what would happen if they need to find a new property management company. Yes, you can spend all day thinking of contingencies but just stick with some of the main ones and prepare for them. This will give you peace of mind that you can deal with anything unexpected that may come your way. The more you think in advance the fewer late night emergencies you’ll be dealing with.
Last, think about how you’ll protect yourself. For example, you’ll probably want a combination of a house inspection, insurance, and a corporate structure, but there might be other things, too, so make sure you talk to an attorney.
It can feel overwhelming buying an investment property but it doesn’t have to be. Use this helpful checklist to guide you through each of these 6 points and you’ll have a strong command of the situation to help you before, during, and after the acquisition.