Tips for purchasing Your First Investment Property
Congratulations on your decision to purchase your first investment property! Whether you’ll be staying at the property or solely be renting it out, there are a few things you need to know before starting the home searching process.
3 Signs You’re Ready to Buy an Investment Property
You’re Financially Stable - Investment properties require more financial stability than primary homes, especially if you’re planning on renting them out to tenants. Most mortgage lenders will require 15% down for investment properties. When purchasing an investment property, make sure you have enough money in your budget for the purchase of the property as well as any ongoing maintenance and repairs!
There’s Return on Investment (ROI) - When purchasing an investment property, you want to ensure that the property will see cash flow. If you’ll be renting out the property, consider calculating the potential ROI on the property before making a purchase.
You Have Time to Manage It - Investment property’s take a lot of time, especially when it comes to managing the property and tenants. If you want to make an investment property work but don’t have time, consider hiring a property manager to handle the admin side of things.
Things to Consider When Purchasing an Investment Property
Time, mortgages, and return on investment are only a few things you’ll need to figure out before purchasing an investment property. Here are a few more things you’ll want to consider before purchasing an investment property.
Housing Market Trends
When purchasing an investment property, you want to choose a property that’s value increases over time. The best way to determine this is to watch housing market indicators and rentals and to compare previous property taxes and prices to where they are now.
Purchasing with a Partner
While purchasing an investment property with a partner sounds like a great idea since it means pooling money and splitting costs and responsibilities, it also means splitting profits and legal liability. If you opt to purchase an investment property with a partner, make sure they are trustworthy, responsible, and proactive.
Property Taxes
The amount you pay in property taxes will directly relate to the value of your home, and when your home is worth more money, the more your property taxes will be (an vice versa). Local governments set their own property tax rates and to get a better idea of what these will be, your real estate agent will be able to help!
Hiring a Property Management Company
Interested in purchasing an investment property but don’t have the time (or interest) to manage the property and tenants? A property management company will be able to help! They’ll be able to assist with any daily maintenance, collecting rent, and marketing the property to potential tenants.
Interested in purchasing your first investment property or looking for a property manager to help manage your property? Contact our team at RESOURCE360 today at 203.594.0360.