When considering the possibility of investing in real estate, it is important for you to consider a few things before diving in. Here are our top 4 tips for first-time real estate investors!
Would you consider yourself a handyperson? Part of owning investment property is having a mechanism in place for dealing with maintenance requests from your tenants. Now, it is not required for you to actually be a handyperson and do all the maintenance yourself, but you do need to have a system in place such as a team of handypeople or contractors that can execute on those maintenance requests for your properties. Make sure to account for the cost of hiring those individuals in your calculations.
When looking at potential locations for your first property, you must think as your potential tenant would. Is the property you are thinking about good for singles, couples, small families, or large families? If so, what are the things that are important to them? Are school rankings at the top of the list, and is the property you are considering in a strong school district? Maybe proximity to high paying jobs is more important? Always make sure to look at local community amenities, crime rates, and the overall city outlook. These are just some of the location factors you should be considering in your first investment property. Not considering them could cost you big when it comes time to set the rental rates for your units.
What can you do to maximize your ROI on your investment property? When deciding to buy the property outright or financing with 20% down, you have to consider what your goals are. If your objective is to generate cashflow every month then buying the investment property makes the most sense as you will not have a mortgage to pay every month. If however, the objective is to increase your ROI on the investment made, then financing might be the better option if the loan terms are right. Remember that in this scenario, you also leave yourself with funds to put the down payment on a second and third property.
Everyone knows about home owner’s insurance, but have you heard of landlord insurance? Protect your revenue-generating property by protecting it with landlord insurance which will help protect against property damage, loss of rental income, and much more related to renting out your property!