Buying an investment property can provide you with long-term passive income. But to be successful, you'll not only need to find a profitable property, but also find tenants and manage the property. This might include making regular upgrades and repairs and troubleshooting issues as necessary. Read on for a few pointers from True Vision By Knowledge.
Getting Started
Before you start looking at potential investment properties, you'll want to ensure your finances are in order. Buying an investment property is much like buying a primary residence, in that you'll need a down payment, and your credit will need to be in good standing to qualify for the best rates and terms. Check your credit, and report any inaccuracies, and talk to a reputable lender about the best loan products available for purchasing a rental property.
You'll also want to research the local market to get a feel for prices and availability and to assess typical vacancy rates in the area where you're planning to buy. This will help you understand what you can afford and what you’ll be able to charge in rent.
A knowledgeable real estate professional can be a major asset when you buy your first property. The True Vision By Knowledge team can provide expert insights into investment property availability in the local area.
What to Look For
There are several things to consider when buying an investment property, including age and condition. According to Old House Online, the older the home, the more likely you'll be making regular repairs. So if the house isn’t in great shape, you'll need to factor in what it will take to get the property into good enough condition to rent. Also consider the potential for appreciation; you want a property that's anticipated to go up in value.
Location is also an important issue. If you buy something outside of your geographic area, you may want to hire a property manager to handle basic management needs on your behalf. Otherwise, you'll be traveling and trying to manage it yourself long distance.
Making the Purchase
A real estate professional can help you find appropriate properties in your price range. You may opt for a single-family residence, like a house, townhome or condo, or you may prefer the idea of multifamily housing, like an apartment complex. It's wise to conduct a thorough inspection before making an offer, and if you're looking at a place that needs significant repairs, bring in a general contractor to give you an estimate, both for indoor and outdoor work.
For example, if you want to replace your roof – which will cost between $2,000 and $6,000, depending on size and materials – outline your needs, get written estimates, read reviews online, and make sure contractors are licensed and insured. It’s never been easier to find a qualified fence pro; simply do an online search for “roofing near me” and check out Angi’s list of contractors.
Getting Ready for Tenants
You'll want to move quickly after the property closes to start advertising to prospective renters. You'll be paying the mortgage every month regardless of whether you have paying tenants, so getting residents lined up as soon as possible will ensure you're generating income right from the start. According to Rent Prep, it’s advisable to consider how you'll want to screen and what kinds of deposits you'll require. First and last month’s rent and security and cleaning deposits are standard. You may also opt to conduct a background check and/or review credit scores as well, or ask for references from previous landlords.
Investing in a rental property can help you generate passive income as well as serve as a viable long-term investment. Conduct your due diligence and get your finances in order to ensure a good outcome, and reach out for expert help where appropriate.
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Interested in selling property in the Battle Creek area? Look no further than the team at True Vision By Knowledge. Reach out to us today! (269) 261-0628
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