Buying your first investment property can be overwhelming, but it doesn’t have to be! A rental property is one of the largest assets you can buy, and with a little bit of time and effort, it can be a great way to generate passive income. If you’ve been asking yourself if a rental property is right for you, here are a few things to think about before you take the leap into becoming a landlord.
1. Are you ready to be a landlord?
You need to take some time to seriously think about your ability to manage your properties. Unless you use a property management company (Sixteen 33 Realty can help with that), you are the one who will handle repairs and maintenance on the property. Do you have a list of contractors who can be available when these types of things need addressed?
2. Save for a down payment
To purchase an investment property, you normally need 20-25% down payment.
3. Research the best area
It is important to find the right location, for you. The last thing you want is to be stuck with a rental property in an area that is declining, or doesn’t make sense financially because of high taxes or fees.
4. Calculate your margins
It is standard practice to set a goal of a 10% return. Estimate maintenance costs at 1% of the property value annually and always factor in unexpected costs. You should also include homeowners insurance, any condo or HOA fees, property taxes, and monthly expenses such as pest control and exterior maintenance.
If you’re looking to get into the rental property business, or discuss a potential investment property, contact us at firstname.lastname@example.org. We’d love to help!