With beautiful beaches, a charming small-town atmosphere, and plenty of real estate options, it's little wonder why Santa Cruz is one of the most popular coastal communities in California. When you invest in Santa Cruz real estate at the right time, at the right price, it is proven to be a solid investment— whether it's you're looking for something to rent out to long-term tenants or a part-time residence for yourself and short-term renters.
Before you commit, here's what you need to know about the dos and don't of buying an investment property:
Considerations Before Buying Your First Investment Home
Before jumping in head-first with your first investment property, there are a few things you should be aware of. Owning investment property is and should be an interactive business. It is a hands-on investment that will require your time, energy and money. It's not something you can buy and churn a profit from without putting in any work. You'll need to be prepared to be a landlord, which includes ordering repairs as they're needed and making tough decisions. If you're not willing to be a landlord, you'll have to hire a property manager to act on your behalf, which will eat into your bottom line.
Secondly, you'll want to think about what kind of investment property you're looking for. If it's primarily a second-home for yourself that you'd like to rent out on Airbnb when you're not around, then your going to want something closer to town and popular amenities. You'll also want to factor in the cost of furnishing the home into the overall budget.
If it's a full-time rental property, you don't have to worry about furnishing the home, but may want something with more bedrooms to accommodate more renters. Santa Cruz has a severe shortage of long-term rental properties right now. And with local governments looking to crack down on short-term rentals, investing in a long-term rental might be the most low-risk option right now.
The following tips will help you avoid common commercial and residential real estate investment mistakes:
Things To Look For In The Perfect Investment Property:
1. Location, Location, Location
2. Bigger is not always better
3. Stick with deals that have a 15% return on investment
4. Stick with homes priced in the low median price range
5. Stick with a 3 bedroom, 2 bath, 2-car garage, single-family homes in Santa Cruz
6. Keep your rental properties close to home
7. Use other people’s money as much as possible
Things To Avoid At All Costs
1. Do not buy your 2nd investment property until your first is making you money
2. Do not buy a home without inspections
3. Don’t buy a property without title insurance
4. Don’t rush in
5. Don’t get invested emotionally
6. Don’t rely on seller’s documentation
7. Don’t handle it all yourself
A novice investor may struggle as they try to navigate through the complicated world of real estate investing and purchasing investment properties. Following these do’s and don’ts will keep your head straight and take the emotion out of buying Santa Cruz real estate for investment purposes.