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Investing in rental property is just like making any other type of investment. If you want to make money, the key is to reduce your risks and increase any returns. If you’re looking to get your feet wet in this type of investment, you can dive on in with these helpful hints designed to make finding your first rental properties a breeze.
You can eliminate a monthly mortgage and get a better interest rate if you begin your career in investing in rental property by occupying the property you purchase. You’ll also have a wider selection of available properties if you approach lenders as an owner occupant. If it’s a single occupant dwelling, you can live there for a year and move on. If multiple units are available you can keep an eye on the tenants and your investment.
You have to become a market expert and the only way to do that is to roll up your sleeves, poke around and get to know the area. Find a broker and get a list of all the active, closed, and sold properties within an eight-block area of where you’re hoping to purchase, and then do a walk-through on at least 5-10 of them. Compare values and determine selling points. Knowing your market is vital to successful marketing.
You have to understand ALL the costs associated with ownership: interest payments, principal payments, taxes, insurance, repairs, maintenance, landscaping, and more. Always make sure that the asking price fits within your budget constraints and get the most bang for your buck. The more money you invest, the less your return, so you have to think smart before buying any property.
Look for properties that will be attractive to buyers. Properties near bus lines, trains, grocery stores, and entertainment options are great, but the property has to be far enough away to be quiet. Look for signs of good neighbors, upkeep, and avoid boarded-up buildings, especially in today’s market.
Owning rental property can be a good investment that provides diversity for your financial portfolio and a cash flow you can live on. Since this type of investment and mortgage is a big decision, it’s always smart to speak with a financial planning professional before jumping on board.