When it comes to your financial nest egg, where and what you spend your money on should always be taken into special consideration at all times. If you are looking to pour some of your money into an investment property you need to make sure that you will get an adequate return on the money you have put in.
Investment properties are typically where the investor purchases the property but usually does not occupy it. An investor generates money by rental income as well as capital gains that are created from the property.
Here are some of the more popular investment properties that investors have the most success in, maybe one of them will be right for you.
Housing and Real Estate — The most popular form of investment property has to be rental homes or apartments. Real Estate is always in high demand whether it be a buyers or a seller’s market. Having the initial amount of funds to put into for buying the rental unit isn’t usually an issue for most landlords; it is the ongoing amount of money needed for maintenance and upkeep that cause many investors to fail at this market.
The rule of thumb is to have it least 25 percent of the initial start up cost or money you have invested in cash on hand at all times. There are several reasons for this, the first being for ongoing repairs that will likely come up over the course of owning the property such as damage to the structure or repairing items that need ongoing maintenance such as the roof and windows.
If legal issues arise such as having to remove tenants or being sued by them, the proper amount of funds needs to be within immediate reach in the event this crisis arises or in the event the tenant suddenly leaves or quits paying their rent all together.
Storefronts — Storefronts can also turn into a successful form of property investment by renting the store to someone who owns a small business. You could also request to have a small percentage of the sales in lieu for a smaller amount of rent or you could offer a designated amount of rent for an extended period of time and specify it in a lease contract. Having multiple storefronts in one building such like one in a strip mall is also popular as an investment property in which to have a multiple income flow being generated each month.
For storefront investments always make sure you have access or know of access into the store. If there is a legal matter or a safety issue especially regarding consumers, you will ultimately be held responsible.
For any kind of investment property, always make sure you have full contact information of the renters that are renting your facilities. Also make sure you have more than enough liability insurance to protect you and your properties in the event of an accident, fire or even theft.
Being prepared offers you the first step to success and profit when it comes to you investment properties.
NAI Utah (http://naiutah.com) is a Utah investment property management service and commercial real estate brokerage. With services that range from leasing, representation, administration, and more, NAI takes the hassle out of property management. Art Gib is a freelance writer.
