Purchasing a rental property is a big decision, and you should consider it carefully before you take action. While real estate remains a popular investment option, taking the leap into landlordship requires a firm knowledge of the market and an imagination of what to expect.
Do your research and talk to the experts to help you make the best decision for you. However, if you are a first time investor, navigating the market can be difficult unless you know what you are doing. Take a look at these six helpful tips that will help you make better choices as a first time rental property buyer.
Single Family Homes
For first time investors, you probably want to keep things simple. The goal is to invest in cash flow positive properties to hopefully provide you some extra monthly income. You don’t want to get in over your head right out of the gate. A single family home may be much more manageable for first timers than say a multi-unit building that will require much more time and effort.
Return On Investment
Research the resale market in the area where you are considering making a purchase. Speak with a real estate expert and an investment advisor to make certain that you are looking in the best areas to make a profit. Focus on areas that are central, have available transportation and amenities and neighborhoods that are in transition.
Look for Properties Nationwide
It’s not necessary to buy an income property in the same city in which you reside. By utilizing the services of a property management firm you can be free to make a purchase anywhere in the country. This can open up a ton of more affordable options and vacation properties that may not be available in your area.
Buy Rent Ready
Many new investors fail to think about the work that will have to go into an income property before it’s ready to actually rent. You may have to do anything from small repairs and cosmetic finishing to a full renovation, if needed. Either way, if your property isn’t rent-ready you will be floating two mortgages without income until the work is done. Try to find a property that requires little to no additional work prior to putting renters in the home.
Know The Laws
With the emergence of short-term rental sites like Airbnb, many cities have tightened their restrictions on short-term rental leases. It’s important to know what the rules are in your area before you make a purchase. Also, there are many tenant and landlord laws that you will have to become familiar with to protect yourself and your property in the future.
Bring In The Pros
When you are considering a real estate investment it’s in your best interest to get all of the professional advice that you can. It’s not just as simple as buying a home and renting it out for cash.
Talk to a real estate broker to help you make a decision between potential properties. Make sure to speak to a real estate lawyer as well. He or she can guide you through the ever-changing legalities of owning an income property. If you don’t already have one, a financial advisor can help you make the best investment decisions that will benefit your portfolio in the long term.