Buying a property can be an emotional experience, but as an investor you need to put those emotions aside and focus on whether the math makes sense. When you’re looking for a Winston-Salem investment property, consider its location, its potential for high rents and good tenants, and whether it can provide the type of cash flow and ROI you need to be profitable.
Before you can choose a property that’s right for you, it’s important to understand your individual investment goals. Think about why you’re making the acquisition and how it will factor into your overall investment portfolio. You need to have your investment goals and strategies at the forefront of any plan to buy something new.
Identifying Strong Winston-Salem Investment Properties
Regardless of your investment goals, an attractive investment property has a few specific characteristics:
- Location. It needs to be in an area that has good neighborhoods, acceptable schools, and a strong economy. Your prospective tenants will want an easy commute to work and access to grocery stores, shopping, restaurants, and recreation. Don’t buy something that’s too remote.
- Potential for appreciation. Look for a home that will grow in value. You know the real estate market is well-positioned when there is strong infrastructure and new jobs and industries coming into the area. Properties in neighborhoods that are seeing new development have a good chance for appreciation.
- Cash flow potential. Earning a strong rental income is critical to the success of your investment, so make sure you’re choosing a property that will bring in enough rent to make a dent in your mortgage payments.
Evaluate Potential Rental Income
You’ll need to evaluate every potential investment against the amount of rent you can earn on it. Don’t accept a general estimate from your real estate agent. Talk to property managers who have actually rented out homes. We know the market. We’ll help you dig a little deeper and gather some data that you can rely on to run your numbers and establish a projected cash flow.
Look at what comparable properties have rented for in the area. Many investors will check out sites like Zillow and Craigslist. Those can be helpful, but you’re only getting an idea of what properties are listed for. You can’t know what they actually rented for unless you have access to that information. Talk to a property management company that knows the market and can help you with a comparative market analysis for potential investment properties.
Evaluate Potential Expenses and Losses
You’ll need to plan for things like vacancy, turnover, maintenance issues, and even risks like a non-paying tenant or a global pandemic. Measure the cost of taxes, insurance, management fees, and routine and emergency maintenance expenses against your potential income to get an accurate idea of what your cash flow will look like. Your operating expenses will depend on the age and condition of your property, the neighborhood it’s in, and the amount you’re willing to spend on marketing, tenant incentives, etc.
Make Risk Management Part of Your Investment Strategy
If you’re hoping to invest $300,000, be creative with how you spend that money. You can buy one property for $300,000 or you can buy three properties for $100,000. Buying a group of properties will be a safer and more lucrative investment for you. You’ll have better cash flow coming in from three different sources .This helps you avoid the risk of vacancy loss. If one of those properties is vacant, you still have income from the other two. Multiple investment properties also help to create more stability for your portfolio. You have a lot of options with how to finance and leverage your investment.
Again – it depends on your investment goals. What works for one investor will not necessarily work for another investor. If you want to choose the Winston-Salem investment property that’s right for you, it’s important to know your goals and to work with a local expert who can help you meet them.
We’d like to help. Contact our team at Capstone Realty.