Thinking of buying an investment property? There are lots of things you need to consider.
First off, you need to research the area – no matter what part of the country the home is in. What are the major industries? What’s the unemployment rate? How is the school system? What is the median home price, how much are property taxes and what kind of rent can you expect to get for the property you’ve got your eye on?
Beyond that, you need to get a home inspection from a qualified inspector. He or she can check the roof, the foundation, the electrical system, the plumbing system, the water heater … those are just some of the things you need to know about before diving in.
I have a friend who’s in the process of buying an investment property in Florida and some of the costs she had anticipated for needed repairs are running higher than expected. Nothing super dramatic, mind you, but increased costs for things like roof repair and new kitchen cabinets add up quickly.
And needless to say, make sure you buy adequate insurance if you plan to rent the home to tenants. And it’s a different kind of policy – a landlord’s policy as opposed to a homeowner’s policy.
Since the home is in Florida, hurricane and flood insurance are key to adequate coverage in that particular neighborhood. Hurricane coverage is part of the homeowners policy, and that bumps up the deductible – but just for hurrucane peril.
So what if a hurricane causes a flood? If you don’t have flood insurance (which must be purchased separately from your homeowners policy) you won’t be covered. These are all things to consider when buying a rental property.
And remember, natural hazards vary from state to state. In California, for example, earthquakes are a real possibility.
Questions? Call Carol Smith at 661-803-3803 or visit insurancescv.com.