Investing in real estate can provide property owners in Illinois with a constant and stable source of extra income. However, to ensure that investing in real estate is a profitable endeavor, those interested in buying residential property should perform extensive research.

Consider the purpose

Before making an investment, buyers should consider their goals and whether or not they are ready to handle the responsibilities of managing a rental property. Future property owners should be prepared to perform multiple calculations to determine if a house is a good investment and to handle general maintenance, like plumbing repairs, painting and cleaning the carpets, for their tenants in the future.

Understand the neighborhood

When searching for houses in a particular location, investors should get to know the neighborhood. Those pursuing this type of investment should figure out if there is something special about the area that could add to the property’s value. For instance, purchasing a home near a body of water or right next to a freeway entrance could impact its worth. Additionally, future investors should educate themselves regarding the area’s zoning laws and if there are any planned construction projects for the future that could determine what the property is worth in five years.

Be diligent about price

When buying real estate, it is crucial to purchase the property at a good price. According to U.S. News, investors should attempt to purchase a home that is approximately 12 times the amount of the property’s yearly rent. Purchasers should not feel pressured into buying a home and wait until they can find a piece of real estate that will not exceed what their monthly cost will be.

Questions to ask

When buyers find a home they are interested in purchasing, they should ask themselves a series of questions to ensure they are making a good investment. These include the following:

  • Is the home built near a commercial site?
  • Is the property located in a problematic area, such as one that is prone to flooding or a place that is known for its termite problems?
  • Are there any permit issues or foundation problems that need to be taken care of?
  • What things will need to be replaced as soon as possible?
  • Why is the current owner selling and what did they initially pay for the property?

 Asking themselves these questions and doing proper research can prepare buyers for making this type of investment. Investors should also consider consulting with an attorney before making a final purchase to ensure they are making a sound investment.