Buying a property is a great investment strategy for many people to create wealth, build financial security, and keep a steady cash flow.
However, investing in a property will not guarantee overnight success. It is important to do proper research and manage your investment in a smart way. There are always risks involved in any investment.
Why you should buy an investment property in Tacoma, WA?
- Tacoma is a satellite city of Seattle in King County. You will benefit from the steady growth of the largest city in Washington.
- The tax climate is friendly. There is no personal or corporate income tax in Washington.
- Tacoma is 10 miles away from the Lewis-McChord joint base. They are a big employer, giving jobs to more than 10,000 people.
- The cost of housing is lower than Seattle. Still, you will see your investment appreciate over time.
Let us look at top tips when buying an investment property in Tacoma, Washington:
#1: Conduct a Rent Survey
Crunch the numbers to see how much money you could get out of a property. In turn, you will see if you should purchase it. Find comparable properties in the neighborhood, and then determine how much they charge for rent.
Survey the occupancy rates to find out if there is enough demand for properties like the one you are considering purchasing.
Is the demand good and the rent competitive?
#2: Study the Metrics
Check multiple factors to determine whether the particular property has enough potential. You could look at:
- Current population growth trends
- Employment rates
- Historical growth trends
- Major downsizing in the area
- Vacancy rates
All of these numbers reflect the potential of the investment. It is hard to make financially sound choices without looking into the relevant statistics.
#3: Get the Property Inspected
Hiring a professional property inspector is a wise decision. There are many tiny details that only an expert can spot at first sight. Among other things, inspectors check the following:
- Roof and chimney conditions
- Moisture levels in basements or crawlspaces
- Electrical systems
If you notice any specific issues, you can always hire an expert with a narrower specialty. For example, you may need a mold inspection or the services of a structural engineer.
#4: Factor in Associated Costs
Cash flow represents the money flowing in and out of your investment(s).
How do you accurately predict the cash flow?
Looking at the earnings is only a part of the equation. Good planning means accounting for all the expenses, including:
- Maintenance and repairs
- Mortgage payments
- Property management fees or your own time
Before making any investments, make sure that the predicted cash flow is positive. You may consider planning a small buffer that covers unexpected expenses as well.
#5: Have a Plan “B” Ready for Action
Successful investors rely on the knowledge of when to exit. Sometimes you may have to get out earlier than you originally planned. You will get the most of this situation when you have already drafted an exit plan.
For example, having an adjustable-rate mortgage go up calls for selling the property beforehand.
Additionally, make sure you have Plan “A” for your Tacoma, WA, property that is more than just buy cheap and sell high. Your primary exit strategy could be based on one of these approaches:
- Seller financing
- Buy-and-hold real estate investing
There are no right or wrong strategies. Every strategy has its own benefits and drawbacks. You have to pick an approach based on your risk aversion, market conditions, and characteristics of the property.
#6: Find a Professional Support Team
Hiring an experienced property management company raises your chances of having a successful rental business. A property management team helps you to achieve your rental property goals. Here are some of the top services you could expect:
- Rent collection
- Advertising and marketing
- Tenant screening
- Maintenance and repairs
- Lease agreements
It makes things much easier when you can rely on a professional and experienced team.
#7: Make Your Property More Attractive
High vacancy rates are bad for your cash flow. Every month costs you potential rental income when there are no tenants. It is important to find ways to make the rental unit more attractive.
- Get a paint job done. This is a low-cost fix that can help you when looking for tenants. Many landlords underestimate the difference a fresh coat of paint can make.
- Boost the curb appeal. First impressions matter, so take care of the property's exterior by boosting the curb appeal. Add beautiful flowers and plants to create a friendlier welcome. Refresh surfaces that have chipped paint. Mow the lawn, and ensure the property is clear of trash, leaves, and debris.
- Upgrade the property's hardware. See if the house number, light fixtures, and mailbox are in good shape. If anything is broken, worn down, or missing, get it fixed before any interested buyers arrive.
- Opt for thorough cleaning. Make sure that your property comes out on top regarding cleanliness. Remove cobwebs, dust, grease, and anything else on the interior surfaces in your rental property.
The bottom line: buying an investment property in Tacoma, Washington
Investment properties can be lucrative. Nevertheless, like any other investment, do not take things at face value. Conduct research, analyze the market, and crunch the numbers to ensure your deal makes sense financially.
Do not forget to have a plan “B” for a quick exit. When the going gets tough, cashing in on your investment is sometimes the smartest choice you can make.
Working together with a property management company will make your life easier. You do not have to worry about the many challenges of being a landlord.
Contact us at Tacoma PMC today!