When buying a house, there are many different considerations that you must keep in mind to ensure that you select the right property for your unique needs and preferences. But many novice investors make the mistake of taking the exact same approach when buying real estate as an investment property. The reality is that you must consider an entirely different set of factors when acquiring real estate as an investor. So let’s look at how the considerations for home buying and investment acquisitions vary in today’s article from Southern Connecticut Coldwell Banker Realtor Judy Szablak.
How is Home Buying Different From Real Estate Investing?
When buying a home, your priorities and prime considerations are very, very different from those that you would consider if you were an investor. Here are a few key ways in which the two approaches differ and how you can ensure that you go into the real estate investing process with the right strategy and approach.
• Buying a home is a personal, emotion-based process. Investing is a more impersonal logic-based process. When buying a new home, your decision is largely rooted in emotion and how you feel about the property on an emotional level. Maybe one home has a cozy, home-like feeling that reminds you of the home where you grew up and made wonderful memories. Or perhaps you dislike a home because it feels dark, depressing and gloomy. Buying a home is guided by how you feel, whereas a real estate investor must put all of these emotions aside, focusing primarily on facts and figures.
• You buy a home with your own preferences in mind, whereas investors buy with the renter in mind. When purchasing real estate, homebuyers will look at a home and evaluate it based upon their own preferences. Perhaps you really dislike the look of wood flooring in the bedrooms or maybe you’re partial to an open floor plan since it will allow you to keep an eye on the children when you’re working in the kitchen. Whatever the case, it’s important for investors to focus on what’s most popular and desirable amongst potential tenants. For example, while you may dislike the look of wood flooring in the bedrooms, it would be preferable to carpeting since carpets are prone to soiling and odors. Carpeting is far more maintenance-intensive than hardwood flooring, so it’s a poor choice for rental properties. This is one example of how your personal preferences should be put aside. Instead, the focus should be on:
- How appealing is a particular feature to prospective tenants?
- How much maintenance will be required?
- Will a specific feature hold up well to heavy use or even abuse?
These are important points to keep in mind.
• Real estate investors have greater latitude to perform major renovations or home improvements. It would be impractical (and downright uncomfortable) to perform a massive renovation project while living in the home. So as an alternative, many home buyers purchase a home with a plan to perform renovations or improvements in stages or they must plan to relocate for a period of time while the work is underway. But unlike the homeowner, a real estate investor doesn’t have to worry about ensuring that the property is “livable” during the construction process. This means that you can perform massive renovations with far greater ease and often, at a much better price since all of the work can be performed at once instead of breaking it into smaller projects. This means that real estate investors can seek a broader range of properties, including dilapidated homes that require lots of improvements and updates
• You have a broader range of financial considerations with a real estate investment. When buying a home, most folks focus on the mortgage, taxes and utilities and their ability to cover those expenses. But a real estate investor must consider all of these factors and many others. There is the cost of property management. There is a potential for income that varies from month to month depending upon occupancy. You’ll also need to pay for any incidental repairs and maintenance. There’s also a cost associated with listing a rental with a real estate agency or advertising and marketing if you opt to find tenants without the help of a Realtor. Plus, prospective residents typically must undergo a background check, credit check and other vetting. There are even fees associated with an eviction. So investors will need to crunch many additional figures. Omitting just one figure from the equation can result in a situation where the investor loses money instead of earning a profit.
Additionally, be sure to notify your real estate agent if you’re seeking to acquire a property as an investor. Your Realtor can help you look at the home from an investor’s perspective.
Trust Your Home Sale to a Top Southern Connecticut Realtor
Whether you’re searching for your next home or wish to acquire a piece of real estate that will be used as an investment, you can turn to a top Southern Connecticut real estate professional, Realtor Judy Szablak. An agent with Coldwell Banker Residential Brokerage, based in Westport, CT, Judy Szablak has been in the real estate field for decades. She specializes in the purchase and sale of single family homes, new construction, luxury properties, condominiums and even seasonal or rental homes.
Serving clients since 1984 and recently amongst the top 6% of Coldwell Banker real estate agents worldwide, Realtor Judy Szablak has more than 30 years of experience working in the Southern Connecticut real estate industry. She works with clients in a number of Southern Connecticut communities, including Westport, Trumbull, Weston, Fairfield, Norwalk, Stamford, Easton, Wilton and Rowayton amongst others.
Browse Judy’s property listings to see if your new home is amongst her listings! Or, if you’re ready to sell your Southern Connecticut home, turn to the best. With over three decades of experience selling homes in this area, Judy knows exactly what it takes to ensure a smooth and stress-free home sale. Call Realtor Judy Szablak today at 203.257.5892.