It’s exciting to buy your first rental property, but there are important things to consider before you jump in too fast.
Purchasing property for rental can be a very lucrative enterprise, as long as you do a bit of due diligence on your own behalf before you begin shelling out the cash. Here are some straight-forward tips to bear in mind as you begin your first rental property ownership adventure:
- Understand the market
The mortgage market has its highs and lows, so getting the right mortgage can reduce uncertainty and free up cash to save on things like repairs and maintenance.
- Get your financing in place
Weight the cost of your financing options and compare rates before deciding. Do you want a 15- or 30-year mortgage? Do you want a fixed or adjustable rate?
- Start out with a single-family home
Having a single tenant to start with is a simple way to get the feel of your new role. Maintenance is more manageable too.
- Put enough cash in to limit risk and ensure cash flow
By putting enough money down you will ensure better cash flow and leave space for unexpected costs. It helps if the economy takes a downturn, too.
- Use a property manager from day one
Finding good tenants and keeping them can be difficult and time-consuming. One of the advantages of a professional property management company is they will screen tenants and manage surprise calls in the night when something breaks.
- Focus on location
You obviously want to get a high return on your investment, so select a location that shows growth and promise. It’s a plus if you’re familiar with the area. Find out what real estate in these areas sells for.
- Have a marketing strategy
Investing in a rental property that is vacant means finding tenants is priority one. Have a smart strategy in place for locating and attracting the best tenants.
- Speak with people in the neighborhood
It benefits your decision making to talk with some of the people in the neighborhood you’re buying into. Local merchants are a good source of information, too.
- Understand rent control regulations
Different states and cities have various rent control regulations. Find out what these are before deciding. There may be pros and cons to buying into the area.
- Buying rent-ready property can be a plus
Rent-ready property can offer advantages and now is a good time for this segment of the market. The build-to-rent market is very active throughout the U.S.
Overall, there are many things to consider before becoming a rental property owner. It can be a rewarding source of income, whether secondary or primary. That depends on your particular circumstances. Taking time to give thought to each of these smart tips will help you through your decision making process. If you find you have questions, feel free to contact us. Cousin James Management does more than property management. We help people buy and sell investment property throughout the Dallas / Fort Worth area. Contact us anytime. We would love to meet you.