Investment Properties: Choosing the Right Assets for Your Portfolio

Investment Properties: Choosing the Right Assets for Your Portfolio

In 2023, making an investment in real estate comes with some complications. One of them is that now isn't the best time to buy and flip properties, as many buyers are waiting out the high interest rates.

However, if you have the capital, now is the perfect time to buy rental investment properties. The question is, how can you find the best investment properties for sale that suit your needs and goals?

From assessing your liquidity to performing market research, this guide will hit all of the most important steps.

Read on for our guide to picking the right real estate assets for your portfolio.

Picking the Right Type of Real Estate

It's important to assess the cost and benefits of different types of property, including:

  • Commercial properties
  • Single-family homes
  • Multi-family properties

Oftentimes, commercial and multi-family properties have larger upfront costs and significant maintenance costs due to their size and number of tenants. Commercial properties often have the lowest turnover rate because businesses are less inclined to relocate than residential tenants. Single-family homes are almost always the most affordable investments up front, but they may not generate a profit as fast as an apartment or office building.

Assessing Your Finances

When you're investing in rental properties, it's important to have the funding to cover:

  • Your downpayment
  • Monthly mortgage payments
  • Maintenance costs
  • Emergency maintenance costs
  • Marketing costs

If you're looking for a hands-off experience, you'll also need to cover the cost of property management. While you'll eventually have rental income to cover most (if not all) of these expenses, it's important to have enough liquidity or funding to cover these costs in the face of possible tenant vacancies.

Researching Your Local Market

Once you have an accurate assessment of the money you can spend upfront on your investment, it's time to start researching the market. You can stretch your budget in a neighborhood with lower property values. Even a lower value property is likely to appreciate in value as long as you stay up to date with maintenance and improvements.

Alternatively, you can invest in a neighborhood with high property values and charge more for rent. Keep in mind that if you're considering commercial properties, you're going to want to look at more than the cost of living. You should also assess the appeal the neighborhood has for business owners, who are looking for good space for value and a thriving commercial environment.

Need Help Managing Naperville Investment Properties?

Though we're facing a challenging market for the average buyer and seller, this is still a great time to secure investment properties-as long as you're willing to rent them. Use this guide to get started and determine what your real estate investing strategy should look like.

When you're building a portfolio of real estate, you don't have to become a landlord in the process. PMI is here to help property owners in Naperville and surrounding areas. Contact us to learn more about how we can help.