So, You Want to Buy an Investment Property? Ask Yourself This Question.
I often hear, "I want to buy an investment property." And why not; investment properties can be a great way to build wealth. But as with any type of real estate transaction, buying a rental property can be a bit overwhelming and confusing so it's often tossed to the back-burner as "something we'll do someday".
Whether you're seriously considering acquiring an investment property in the near future or "someday" here's the first question to ask yourself:
Do I want cashflow or appreciation?
If your priority is to have an income each month from rents collected, you want a property that is going to maximize your cashflow.
On the other hand, if you're hoping to sell the home for a lot more than you paid for it in a few years you'll want a property that appreciates in value quickly.
Or, maybe you want a balance of both? There is no "right" answer to this question but understanding what your goals are will help determine what type of home you should buy (single family or multi-unit), where it should be located (location matters), and what type of rental it will be (short term, mid term, long term).
There are pros and cons to all types of investment properties. Read more about that here.