Many people decide to invest in real estate as a way to increase their net worth and supplement their income. Having rental properties makes it possible to own property that increases in value while you rent it out. As an investor who is just getting started, there are a few pro tips to follow when buying your first rental property. Keep them in mind to avoid making mistakes and losing money.
Do Your Research
As an investor, it’s necessary to vet properties and avoid bad investments. Take your time and avoid rushing into buying a property to ensure that you make the right purchase. Real Estate Elevated discusses how one of the most common scams when buying a rental property is an unauthorized agent selling an unoccupied house or a house in foreclosure. You’ll need to verify ownership of rental properties through county records before completing the transaction to protect yourself and avoid falling victim to real estate scams.
Don’t Buy a Fixer-Upper
Many investors make the mistake of purchasing a fixer-upper that is inexpensive with the hope of making an easy flip. It’s a bad idea if this is your first property because it can be difficult and time-consuming to find a contractor who isn’t expensive. You’ll pay as much money to renovate the home as you would to buy a property that’s already in good shape, which means you’ll lose plenty of time trying to renovate and repair the house before you begin to make rental money. Win recommends looking for a couple signs that will almost certainly make a project more expensive than it’s probably worth. Mold, bad roofing, dying or broken heater/air conditioning system, bad foundation, and old wiring are all problems areas that will immediately drive up your renovation costs, and aren’t wise for inexperienced owners. Instead, buy a property that is priced below market and needs a few minor repairs that won’t cost a lot of money.
Work with a Property Management Company
Owners of rental properties should consider working with a property management company due to the convenience that it offers. Renting out a property can quickly become a headache and eat up a lot of your valuable time. A property management company can perform marketing, tenant screening, rent collection, eviction protections, and property maintenance. They’ll do all of the dirty work for a fee to ensure that you can focus your attention on investing in more rental properties instead of dealing with problem tenants and making repairs.
Buying your first rental property is a major step to take that should be well-researched. Knowing the right tips to follow can allow you to make the right investment and begin earning money without any delays.