Buying an investment property can be a lucrative strategy for many people. It is for this reason that so many people are attracted to real estate investing.
You’ve probably heard “location, location, location,” when it comes to buying an investment property. As cliché as it may sound, choosing the right location can make the difference between a thriving rental business and a struggling one.
The city of Torrance, Ca has become one of the most desirable cities in the South Bay region of Los Angeles. In fact, the city has consistently been recognized as one of the safest communities in the greater Los Angeles area.
Aside from being tagged as safe, Torrance also offers good schools, a variety of parks, and a beach close-by. All these and more, make the city attractive for families to live in as well as a place for tourists to visit. And as more and more people move there, property investors see this as a good opportunity to invest in rental housing as well.
So, in today’s article, we are going to share with you some tips for buying an investment property in Torrance, Ca.
7 Tips When Buying Investment Property in Torrance, Ca
Tip #1: Look at the Metrics
When wondering what to study when investing in rental properties, consider its wealth potential. Things like demographics, population growth, historical growth trends, employment opportunities, and vacancy rates can help you with this.
You also want to lookout for red flags. For example, job cuts from a major employer in the community spell disaster for rentals.
Lastly, you want to predict the kind of tenants who may be searching for a home in that particular neighborhood. For instance, consider retirees, families, or young professionals. By doing this, you’ll have an idea on the type of home to invest in.
Tip #2: Perform a Rent Survey
Basically, a rent survey helps ascertain competitive market rents in any particular location. The survey will help you decide how much rent you need to charge so that your property is cash-flow positive.
Determine what comparative properties in that neighborhood are charging for rent. Next, check to see whether the demand exists for the kind of properties you are considering investing in.
Tip #3: Inspect the Property
When looking to buy real estate, inspecting a property can help you decide whether it’s worth pursuing or not. Are the appliances in working order? Is the roof in good condition? Does the basement have a musty odor, or does it flood after a rain?
Additionally, you’ll also need to assess whether the plumbing is up to code and if the electrical system meets local building codes.
Unless you’re an expert, it pays to hire professionals to evaluate the home for you.
Tip #4: Judge Cash Flow Properly
“Cash flow” – and for good reason – is a term that comes up in most conversations on real estate investing. Cash flow can mean the life or death of your Torrance rental business.
But what is cash flow? Simply put, it’s the amount of money, cash and non-cash, moving into and out of your business. In this case, the rent is the money travelling into and property expenses are the monies travelling out of your rental business.
It goes without saying that for your rental business to be profitable, the rent amount needs to exceed your property expenses. Examples of property expenses include property management fees, repairs and maintenance, taxes, mortgage, and insurance.
Tip #5: Assemble a Team of Real Estate Professionals
Being a landlord is a team effort. To be a successful one, you need to have a team of reliable professionals that will be there when you need them.
The team can include these professionals:
- Property Manager: A qualified manager can manage tenants, handle maintenance, and pay the bills. In fact, if you hire the right one, he or she may be the only professional you’ll need.
- General Contractor: You need someone who can handle maintenance and property emergencies when they occur in your property.
- Property Inspector: You need someone who can alert you to structural problems and code violations that require attention.
- Real Estate Agent: A real estate agent is familiar with the local market and can help you, among other things, set rent prices.
- Real Estate Lawyer: Yes, legal issues may not crop up often. However, when they actually do, you’ll need someone to file the paperwork and represent you in court.
- Certified Public Accountant: A good accountant will help you keep your files in order and your tax return accurate.
Tip #6: Have an Exit Strategy
Buying the right property at the right price in Torrance, Ca is key. Be that as it may, it’s only one part of investing. The other part is planning an exit strategy. As the name suggests, an exit strategy is a plan to remove yourself from an investment deal.
It goes without saying that implementing a sound investment strategy is crucial to success. It will result in minimal risks and maximized profits.
Popular real estate exit strategies include:
- Lease Options
- Seller Financing
- Buy And Hold Real Estate
- Flipping
- Wholesaling
Sure, none of the strategies mentioned is right or wrong. Even so, the exit strategy you choose should depend on two important things. One, your level of experience, and two, the amount of cash you want to invest in the project.
Tip #7: Establish Your Options
There is still a chance that your exit strategy may not work. Just when you were thinking of selling, the bottom might fall out of the Torrance real estate market. And, the local rental market might be flooded at the same time as well.
You’ll be glad you researched your exit strategies before purchasing the rental property. If you can’t get the desired cash flow and the property isn’t selling, you might offer a buyer a lease-purchase deal, for instance.
Or, you can opt for wholesaling and offload the property to another investor, albeit at a reduced market rate. Sure, the profit may be smaller. But this may enable you to cut your losses in monthly carrying costs.
Buying an investment property or investing in real estate rentals is in no way an exclusive matter. Any person can do it. But success is what’s exclusive. To be a successful real estate investor in Torrance, you need to learn the ropes of the business. Hopefully, this article has helped you in that regard.
