Thursday, November 23, 2017

# property management # real estate

Top Tips For Investing In Your First Rental Property




Considering how wealthy real estate can potentially make you, and the fact that it’s usually referred to as “passive income”, it’s no surprise that people consider it as a way to make their money. Unfortunately, like most investments, real estate is a tricky and dangerous game. If you’re not careful, you could end up losing all the money that you’ve invested. You also need to be incredibly hands-on and work hard with real estate, which is something that isn’t common with other investments. If you’re not already put off then be sure to read the tips below before you decide if real estate is for you.

1. Do Your Research
The last thing that you want to do is jump into real estate with your eyes closed. Forewarned is forearmed, so you should gather as much information on real estate investment that you possibly can. Look online, read forums and articles, speak to real estate agents, mortgage brokers, and other investors. You can also check out books on real estate investment, as well as the rest of the tips below.

2. Be Sure You’re Handy
There is absolutely nothing “passive” about owning a rental property, in fact, you need to be incredibly hands-on and work incredibly hard. If you don’t know your way around a hammer or a toilet plunger, then you’re going to struggle to be a landlord. You’re going to be the person to call when your tenants have a leaking tap, a stuck door, or a crack in their plaster, so it’s important that you know how to deal with these issues. Of course, you could pay someone to do this for you, but this will quickly get expensive.

3. Pay Your Debts
If you already have debts, like unpaid medical bills or student loans, then you should consider paying these off before you purchase a rental property and put yourself in even more debt. The same goes for if you’re going to have to pay out for anything large in the near future, like Christmas, a holiday, or sending one of your children to college. It’s much better to get these expenses out of the way before you even consider purchasing a property. If you need advice on how to pay off your debts, then visit clark.com.

4. Have The Cash
Even if you haven’t got any current debts or large expenses in the near future, it doesn’t mean that your financial problems are over. You also need to find the money for a down payment, repairs, maintenance, and your living expenses. You can’t start a real estate empire with no money, it simply isn’t possible, so you need to consider if you are financially stable enough to purchase a rental property. You must also remember that the down payments on rental properties are usually much larger than of owner-occupied properties.

5. Increase Your Credit Score
Your credit score is going to determine whether or not you get accepted for a mortgage, so it’s important that it’s in good shape. If you don’t have a great credit score, you will need to find ways to improve it before you can even think about buying a property. A great way to start is to pay off any of those debts that I mentioned earlier. Make sure that you are actually paying this off, rather than using other loans or credit cards to pay it off. This is just moving your debt around, which won’t do you credit score any favours.

6. Start Low-Cost
If you’re new to real estate investment, then it makes sense for you to start small and work your way up to larger and more expensive properties. Find yourself a relatively low-cost property to start off with (no more than $150,000 to $200,000), and once you’ve got a tenant, and have wrapped your head around what you’re doing, you can work up to larger properties.

7. Avoid Fixer-Uppers
Fixer-uppers tend to be a lot cheaper than other properties of a similar size and in a similar area, which might make you think that they’re a better option, as they’re the cheaper option. However, this is a bad idea for your first rental property. If you don’t know what to look out for, you will likely end up having to spend a lot more money on repairs and renovations than you saved on the property in the first place.

8. Choose The Right Location
Your location should depend on the type of tenant that you are hoping to attract. For example, if you were looking to rent to students at a university, then the property should be relatively close to the university. You will also want it to be close to public transport, and plenty of nightlife. On the other hand, if you were looking to rent to a family, you would want a property with a school nearby, and in an area with low crime-rates.

9. Use A Property Management Company
Even the most experienced property owners sometimes struggle to get everything done by themselves, after all, there is a lot that goes into owning a rental property. You need to look through potential tenants and choose one, prepare the house for them, do any repairs, collect rent, and even evict tenants. Property management companies, like vpmpropertymanagement.com, can help you with all of this and can do as much or as little work as you want them to. They will also ensure that you’re not breaking any laws, which is a risk when you’re new to renting property.

There is a lot that goes into owning a rental property, and a lot that you need to consider before you even start looking for a place to buy. You need to be one hundred percent sure that real estate is right for you before making any big decisions, otherwise, you could risk losing a lot of money. Consider your financial stability and your personal circumstances; If you haven’t got enough cash coming in, or haven't got enough time, then real estate may not be for you.

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