Investing in Rental Properties
If you are interested in investing in rental property, purchasing the right rental property for your needs and goals is the first step in turning the property around for profit. Though your previous experience, or inexperience, as a landlord, as well as your tenant selection, impacts the success of your rental; the right kind of property is a huge factor in determining your rate of success or failure. If the current state of the market has you considering rental property investment, a few tricks of the trade can protect you from making costly purchasing errors.
Examine your Current Assets
The initial monetary investment in a rental property is huge. From fitting out the rooms with items like a small double mattress through to making sure you have the right home insurance, your investment is significant. Even if the real estate market is experiencing a down turn, your total investment costs extend beyond the initial purchase. As the owner, you are responsible for taxes, fees, and mortgage payments; even before your units are occupied by tenants. In addition to monetary costs; rental properties require a significant time investment, to maintain the property and grounds. Though you might be able to save money by hiring a landlord or property manager, you’ll lose money by having to pay a salary and you run the risk of miscommunication between tenants, the landlord and you.
Research your Investment Options
There is no one-size-fits-all standard for rental property investments. Before you buy, consider the wide range of property options for investors. Multi-family homes with at least two units are the most common investment option for new investors, but if you are flexible with cost, time, and location, you have several other options.
If you can afford to do some remodelling, or if you are hoping to flip a home; look into historical buildings that may be available for purchase. If you plan on living on the property, you may want a home with an attached suite, or a multi-family home with more than two units. Apartment-style homes are also options for real estate investments, though you may have to adhere to exterior management rules.
Consult with Property Experts
Loan officers and lenders can give you a general idea of the types of property you can currently afford, as well as the approximate profit you can expect down the road. Explore the market on your own first, to determine the kind of property that interests you, but don’t commit to any purchase until you seek the advice of a lender or loan officer.
After you know your financial limits and expectations, consult with an estate agent with particular expertise in purchasing investment rental properties. Estate agents can help you navigate investment property laws, as well as identify the types of home that have the most earning potential. Be sure to focus on properties that provide income from both reliable rental payments from tenants, as well as property appreciation over time.