Thinking about investing in a rental property? This could be a great opportunity for you! If you are new to the investment world you will want to prepare yourself ahead of time. Follow these steps to ensure the process goes smoothly and successfully.
1. Take care of your own debt
Making sure you have paid off your own debt, be it student loans, credit cards, medical bills etc., this should be your first step. But remember, you always want to have some money set aside for the unexpected issues that may arise as any homeowner should.
2. Be ready to pay the down payment
You will be expected to put more money down for a down payment than you would if you were buying something other than an investment property. Make sure you have the money to do so or a plan to get you to that goal before you move ahead with the process of looking.
3. Is the property already occupied?
If there are already tenants living in the units then you need to learn all you can about them. Ask the seller for background checks, credit checks and rental terms so you are well aware of the people you will soon call tenants.
4. If it’s too good to be true, it is
If you find a bargain, it’s a bargain for a reason. You will most likely need to invest more than you were expecting or more than you would on another property that goes for for money. Be careful. If you find a place where you can add an additional bedroom (s) it will instantly raise the value of the property.
5. Location, location, location
Especially if you are buying a place in an area that is less known to you get to know the new neighbors, the neighborhood and get an idea of what it is like during the week and on the weekends. How accessible is this property to public transportation, highways, stores etc.
6. Less is more
Stay simple. Look for solid construction where everything is easily accessible. This will ensure that maintenance will be much easier for you.
7. Be mindful of interest rates
In the majority of cases the interest rate of an investment property is higher than you may think. You want a low mortgage payment that won’t destroy your monthly profit.
8. Know the Rent Control Laws
Do some research on the state and town rent guidelines. You will want to be fully in the know so you don’t make any costly mistakes on security deposits, how much rent to charge and more.
Talk to a licensed Real Estate professional and learn all your options. Be sure to be fully aware of what you are getting into, both benefits and drawbacks before you purchase a rental property because it is very easy to get in over your head. If you would like to talk to our Property Management team for advice shoot us an email at info@lamacchiapm.com or call us at 855.213.3410 and we can help assist you.