It can be a very stimulating moment when you obtain your first Theodore single-family rental property. Still, with every investment come risks. Your first investment property purchase in Theodore should be profitable for you. Here’s how we can do that. Keep reading so that you can come to a successful outcome with your first rental real estate purchase.
The successful outcome of purchasing your first single-family rental home will greatly depend on the clearly defined end goals you’ve set for yourself, even before deciding to invest. One important detail that you need to go over before you search for property is the different qualities found in investment properties. Some of these might be properties in a certain area, with a specific number of bedrooms, or minimum square footage. By knowing the specifics, you can refine your search criteria and locate potential properties faster.
It is important to be financially prepared to purchase an investment property, especially when you’ve already examined which qualities you want for yourself. As industry experts advise, it’s best to settle personal debts and saving for a down payment before starting your property search. When you start saving up for a down payment, remember that all mortgage loans for an investment property will require a 20% down payment. If you want to qualify for more favorable loan rates, it’s best to reduce your personal debts. It’s always good to be one step ahead in planning your finances, but be cautious of high-interest loans or mortgage products that seem a little too good to be true. By prequalifying with a reputable mortgage lender, you will be ready to seize the investment opportunities as they arrive. By making financial readiness a priority, you can more confidently buy that rental property when the time comes.
Once you’ve taken into account all of these important preliminary steps, you can start looking for the right property. When on the search for a property, never forget to run a series of numbers on each prospective property, including your margins, operating expenses, and expected return. All too often, new investors falter due to a lapse of judgment in this area.
New investors sometimes forget to include all of the expenses related to purchasing and preparing the rental property for lease, as well as any ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin goal of 10% and a 6% return in your first year means that you have a profitable investment.
Lastly, you mustn’t forget that an investment property is just that, an investment. Getting attached to a particular property or allowing emotions to guide your decisions is not a good idea. Also, the property you buy is not necessarily a property that you would ever live in yourself. For your first investment, industry experts recommend opting for low-cost properties in high-demand areas. However, stay away from fixer-uppers. If you aren’t into the home remodeling business, and you have no connections to a quality contractor who will do the work for less than the going rate, it’s best to avoid them. Your first single-family rental property is the stepping-stone to a long and profitable investment career, not the ultimate end itself. With this in mind, you steady the course and keep your investment properties in the black.
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