Many people choose to purchase investment properties to have a source of passive income, which is a stream of money that someone earns without necessarily being active in the source of the income. This sounds very lucrative, and it can indeed be a great way to earn extra money while still holding down a full-time job. However, you must do some research before investing. Here are three things to consider before purchasing an investment property.

1. How Much Time You Have

The whole point of having a source of passive income is not having to spend a great deal of time earning that income. However, it is important to note that you will still have to dedicate some amount of time to dealing with things such as maintenance issues and tenant disputes. Think about whether or not you have the time to set aside to deal with the property, and if this is something that you will want to do in addition to your other obligations.

2. How Much Money You Have

If you are considering buying an investment property, chances are you have enough funds for the down payment and subsequent monthly payments, You also need to think about how much money you have for things such as unexpected repairs as well as the annual taxes that you will be required to pay on the residential or commercial property.

In addition, you may have additional costs for things such as advertising, for example, if you own a vacation home that you rent out to tourists during certain times of the year. These costs can add up over time, so estimate how much you can expect to receive in profit and weigh this against your potential costs.

3. If You Should Go in with Someone Else

Purchasing property with someone else can help lower expenses, and it may seem like a good idea to have someone else on board to help with maintaining the property and other responsibilities. Keep in mind, though, that when you bring someone else on board, you will have to split the profits as well as the expenses. Decide whether or not that is worth it to you, and if you do decide to go in on the investment with someone else, make sure to choose someone who you trust and can depend on.

Consider these three things and more before purchasing an investment property.