Buying an investment property in a thriving real estate market enables you to achieve optimal cash flow, tax advantages, and exceptional returns. However, the profits significantly depend on the Merced housing market conditions. With the continuously evolving market trends, the changing patterns of demographics, fluctuating interest rates, and emerging government policies, investors need to be more methodical with their investment plans.
If you are planning to make your first investment, here are three tips to get your investment plan in order.
1. Decide the Type of Property in Which You Want to Invest in Merced
There are several Merced real estate options for investors. Vacation rentals, commercial properties, and residential units such as single-family homes, condominiums, multi-family buildings like duplexes and quadruplexes (sometimes called fourplexes) are all available. It will be easier for you to decide if you are clear about your investment goals and financial capacity.
For instance, if you are looking forward to renting out a home for residential purposes, you might want to consider investing in single-family units. These are less expensive than commercial properties and are a good investment option for beginners. Also, Merced is a family-friendly city and many families prefer to settle here, making single-family units a safe investment decision.
On the other hand, if you are an experienced investor, you may consider diversifying your portfolio by investing in a commercial property or a vacation rental in Merced.
2. Study the Location Before Investing in the Property
Study the location before making any decision regarding your investment because property rates vary in different areas. Research also shows that although there is a high demand for rental homes in Merced, the desirability rate drops as the buildings get older. Hence, we recommend that you invest in a new asset, as much as possible.
In addition, your rental income will vary significantly based on the location of your property. It is important to check if the average rent in an area fits your rent requirements. If you are on a budget, try to identify a location that is not as pricey as the prime neighborhoods, but has good potential for future development and invest accordingly.
Studying the amenities typically offered by other landlords in the county can also help you choose the right location. The standard amenities that tenants look for in a Merced rental property include good daycares, parks, fitness centers, pet-friendly parks, parking spaces, community grounds, and swimming pools.
3. Plan Out Your Finances
Planning your finances is the most important part of your investment journey, as it helps you make the most of every dollar that you invest. Owning a rental home comes with various inherent costs such as insurance, maintenance, property management and accounting fees, council rates, and bank fees. Additionally, there are hidden costs such as property damages due to natural causes, tenant turnover, or unexpected legal expenses.
As a first-time investor, you need to map out your finances properly to ensure that you turn a profit right from the initial stages of investment. However, it takes time to know the nitty-gritty of real estate investment and figure out what works for you and what does not. In such a situation, hiring a professional property manager familiar with the Merced property market and can give you practical advice to turn a good return on investment (ROI) can be highly beneficial.
Our experienced and professional property managers at River Drive Properties can help start your investment journey on a smooth note and make it a success for you. As a first-time property investor, we help you choose the right asset type, identify a good neighborhood, and find the perfect property to maximize your ROI. For more information on how we help first-time investors in Merced, contact us at River Drive Properties.