If you want to successfully invest in real estate, you need to know how to buy rental property. Many property owners fall into the trap of looking for a home that appeals to them. Remember, you won’t be living in this property – tenants will. So, the stainless steel appliances and deluxe master bathroom suite may not be necessary when you’re looking for an investment property.
How to Buy Rental Property: Do Your Math
You don’t want to pay too much for a rental property, and you want to have some idea of what your cash on cash return will be. Consider how much rent you think you’ll be able to earn from a property, and measure that against your expenses. In addition to your mortgage payment, landlord insurance, property taxes, and HOA fees, remember that you’ll also have to budget for vacancies and repairs. There will be turnover costs, landscaping bills, and other costs associated with your rental property. Make sure your property will earn enough to make you comfortable with your ROI.
How to Buy Rental Property: Location and Condition
When you’re buying a house to rent out, make sure you consider the location. Tenants are going to want a good school district and proximity to, work, shopping, and recreation. The condition of the property also matters. You want to get a good deal, but be careful of investing in a property that needs a lot of work before you can even put it on the market. You’ll have to pay for the renovations, and you’ll also lose rental income while it’s vacant and not on the market.
How to Buy Rental Property: Professional Help
When you’re buying a house to rent, you have a lot to gain from working with a professional property manager. A good manager will advise you on which properties will make the most lucrative rentals. They’ll be able to help you price your home correctly, develop an advertising strategy, and find the best tenants. You will also need to talk to vendors, insurance agents, attorneys, and lenders.
Buying a rental property can seem a bit overwhelming, especially if you’re not an experienced real estate investor. If you need help buying your first rental property or you’d like to talk about property management in California City, please contact us at JBL & Associates.