If you’re looking for a quick way to increase your net worth, investing in real estate is one of the best avenues. Yes, investing in properties can give you an extremely high rate of return on investment – but the challenge comes in finding the right property in the right market. You want to find something in good condition and has the potential for growth, and of course, within your price range. So, if you have a limited budget and you are interested in properties priced under $100K, here are a few tips and more information about investment properties in Adelaide to help you find the best property for your investment needs.
The advantages of purchasing a property for less than $100,000
Most properties in your area may be beyond your price range, but you shouldn’t let that discourage you. One way of getting your foot into the real estate business is looking beyond the area you live in. The US. property market is quite diverse, and you will be surprised at the bargains you can find if you’re willing to look in other areas.
It’s not necessary to make a full payment for you to acquire a property
A down payment of 20% is all you need to purchase the property for most investment properties. So, don’t be discouraged if you can’t raise the $100,000 yet. All you need is to start saving for the down payment of $20,000, which will allow you to access the property sooner than if you had to put up the total amount.
There is a greater potential for cash flow
Cheaper properties tend to have a greater potential for cash flow since there is a great demand for affordable housing. So you are unlikely to go without tenants as long as you make the property appealing to tenants. This is especially the case if you can find a property that needs repairs, and you can then fix it up and rent it out for a higher price.
Things to watch for when buying investment properties under $100,000
Despite their higher potential for return on investment, investing in affordable housing may come with some unique challenges. Here are some things to watch for when looking for your next investment property.
● Tenant turnover
Affordable housing properties tend to have a high turnover rate since more people are looking for housing that offers better value for money. So, it is highly likely that you may find yourself in a situation where tenants are moving out faster than expected. This means you may have to spend more on advertising and rehabilitating your property between tenants after each turnover.
One way of solving this problem is to hire a property manager to handle the turnover and advertisement. This will help minimize the amount of work you have to do and help you keep your property in good condition.
● The need for repairs
As mentioned earlier, a benefit of investing in affordable housing is that most of these properties need repairs. This allows you to make some money by fixing it up and renting it out for a higher price. However, you’ll need to crunch your numbers to ensure that you’re still making a profit after factoring in the repairs.
One approach that can help you is hiring a property inspector to check out the property before purchasing it. Property inspectors are professionals who can give you an estimate of how much money you’ll need to spend on repairs, as well as help you negotiate the best price for the property.
● Understand the market health
You need to understand the market health of the area you’re investing in to make sure that you’ll be getting a good return on investment. Due diligence on other external factors such as the local economy, job growth, and population will help you make a better decision.
Also, it is vital to research the demand for affordable housing in the area. This way, you can get an idea of how likely tenants will be willing to rent from you at the price you want to charge.
If your priority is investing in real estate but within a limited budget, affordable housing may just be your ticket to getting into the market. Investing in properties under $100,000 will give you more options and opportunities for cash flow than higher-priced investments might offer. As long as you know what’s involved with these investments, such as tenant turnover rates or the need for repairs, you’ll be able to decide on the best investment suited to your needs.
Prospecting beyond your local area may also help increase your selection of affordable investment property. It gives you access to many different markets across the U.S., where prices are much lower than those locally. By following these tips, you’ll be able to find a property that has good potential for growth and return on investment.
