Investing in real estate seems like a great idea on paper. You buy a house in a nice area, rent it out, and let the passive income flow, right? However, like any investment, it is important to know what you are getting into before dropping the cash.
Here are 5 tips for buying your first investment property.
- Make sure it’s right for you – Your first property will consume a lot of our time as you learn to become a landlord. You could hire a rental management company, but that will eat into your profits. Do you have the time and energy for a part time job? If not, maybe a rental property isn’t right for you.
- Pay down debt – If you have student loans, medical bills, or children attending college, taking on even more debt may not be the right move for you.
- Don’t buy a fixer upper – Although you may be tempted to buy and flip a bargain house, it probably isn’t the best idea. Unless you’re a contactor or know one who will do quality work for cheap, you are likely to pay more in renovations than you would buying a turnkey property.
- Determine your return – For every dollar you invest, what is your return? A 6% return in your first year is considered good, and that number should only rise over time.
- Find the right location – Look for low property taxes, a good school district, low crime rates, a growing job market, and plenty of parks, shopping, and restaurants. This will ensure that your property never remains vacant for too long!
Like any investment, a rental property likely won’t produce a large paycheck for a while, and there are many mistakes that can be made. Consider working with an experienced agent to help you determine the best options when buying your first rental property. Call us today at 919-378-1974! We would love to help you!