Buying a property can be an emotional experience, but as an investor, you need to put those emotions aside and focus on whether the math makes sense. When you’re looking for a St. Louis investment property, consider its location, its potential for high rents and great tenants, and whether it can provide the type of cash flow and ROI you need to be profitable.
Characteristics of Strong St. Louis Investments
An attractive investment property has a few specific characteristics:
- Location. It needs to be in an area that has good neighborhoods, acceptable schools, and a strong economy. Your prospective tenants will want an easy commute to work and access to grocery stores, shopping, restaurants, and recreation. Don’t buy something that’s too remote.
- Potential for appreciation. Look for a home that will grow in value. You know the real estate market is well-positioned when there is strong infrastructure and new jobs and industries coming into the area. Properties in neighborhoods that are seeing new development have a good chance for appreciation.
- Cash flow potential. Earning a strong rental income is critical to the success of your investment, so make sure you’re choosing a property that will bring in enough rent to make a dent in your mortgage payments.
Systems and Structures vs. Cosmetics
In St. Louis, you can find some homes with beautiful turn-of-the-century architecture. This is fun to look at, and you might even consider buying one of those homes for yourself if you were planning to live in it. But, as an investor, you want to choose a simple property that has sound structures and functional systems. A boring three-bedroom home with two bathrooms and some outdoor space is an excellent choice. These make better investments because you won’t have to spend a lot of money on maintenance or renovations.
Don’t get caught up with cosmetics. New paint and upgraded flooring is easy and inexpensive. You can make those changes quickly before you put the property on the market. Focus on the Expensive Stuff like; Electrical work, new roofs, updated plumbing, and improved foundations will take longer and cost more. In St. Louis, flat roofs are common and can be maintenance nightmares, so a roofing inspection is good to have. Look for a property that’s in great shape and can be put on the market almost immediately with minor alterations after you close.
Consider Risk Management
If you’re hoping to invest $300,000, be creative with how you spend that money. You can buy one property for $300,000 or you can buy three properties for $100,000. Buying a group of properties will be a safer and more lucrative investment for you. You’ll have better cash flow coming in from three different sources. This helps you avoid the risk of vacancy loss. If one of those properties is vacant, you still have income from the other two. Multiple investment properties also help to create more stability for your portfolio. You have a lot of options with how to finance and leverage your investment.
Working with professional property managers who are also investors can help you target your purchase effectively. Contact us at AMOSO Properties if you need any help. We love helping new and experienced investors navigate the St. Louis rental market.