Featured Blog From AdviceMine.com: A Guide to Purchasing Your First Investment Property
A Guide to Purchasing Your First Investment Property
Managing a rental property is a great way to make extra income while holding a solid real estate investment. However, it’s not the right job for everyone, and it comes with a lot of elements you must consider beforehand. Here’s a look at a few of the different aspects of investment property ownership you should think about before you dive in, as well as some tips for how to manage your new property:
Before you make your decision, consider the details of what property ownership will look like for you. For example, what parts of town are you considering? Research neighborhoods to learn about different pros and cons.
Some areas will offer a family-friendly vibe that can attract tenants, but the buildings are likely to be on the pricier side. Alternatively, some neighborhoods may have more affordable properties, but you’ll have to sacrifice on rent prices, and may have more trouble finding tenants.
Once you have a general sense of what parts of town you might consider, start figuring out your budget. You can use online calculators to get a sense for what price points you might be able to consider, but the easier step is simply reaching out to your bank. A loan officer will be able to look at all the details of your financial situation and help you know what you can realistically expect from a mortgage.
An important detail: Do not start looking at properties before you know what you can afford! The best-case scenario here is disappointing yourself. Worse, you might wind up going over your budget and getting into a non-profitable situation.
Property Management Pitfalls
In addition to practical matters of purchasing a property, it’s important to consider some of the downfalls and cons of owning an investment property. Not all landlords are able to make a profit from their property. If the building or home needs a lot of work and maintenance, it’s possible that rental rates won’t cover the cost.
Moreover, tenant issues can wind up being incredibly expensive. Evictions, property damage, and other issues are pricey for landlords to deal with. It’s important to make sure you invest in a good lawyer experienced in tenant relationships. They can go over your lease and other paperwork to make sure you’re following all of the local laws.
Remember, owning a property is a lot of work. For some people, it makes more sense to hire a property manager than to take on all the nitty-gritty aspects themselves. These are individuals who can keep your property running the way it needs to while you go about your regular day-to-day life. The right property manager will offer your tenants/guests 24/7 service so they’re available to handle any issues, and some management companies have high-level screening processes to reduce the likelihood of fraud or damage to your home.
However, hiring one is a big decision – after all, paying them will cut into your profits, so it may not make sense to do so. Remember, you can always manage it yourself at the start and hire someone to help out once you’re more established.
There are plenty of things to keep in mind when purchasing your first investment property. It’s a big undertaking, but one that can be enormously rewarding and profitable, if treated with the right seriousness. Do plenty of research so you know you’re making a good purchase, and you’re likely to see a great return on investment!
Photo Credit: Pexels
Latest Blog Posts
Source IV vitamin therapy…you’ve seen it everywhere from your Instagram feed to your neighborhood’s new drip lounge. But what
COVID-19 May Make Your Mortgage More AffordableFirst off, we want you to know that we're in this crisis together. Sure, we've made adjustments to accommodate the "temporary new normal," but still,
Can I Defer a Mortgage Payment?Deferring a mortgage payment means that you are postponing or skipping a mortgage payment until a later date. Those that are going through a temporary financial