Finding the right rental property is certainly one of the keys to succeeding with investment rental property. Below is a guide to help you get started in finding the right property that will help you to generate additional income.
First, consider whether you want to look for rental property on your own or whether you wish to use a broker to assist you in the process. A should be well versed about the local neighborhood, which can be important if you are not from that area.
Before you actually begin looking at prospective properties, make sure that you have gone through your finances and have them in order. Ideally, you should check your credit report several months before you plan to make a purchase in order to be certain that there are not any inaccuracies which could prevent you from obtaining a mortgage for the purchase of your investment property. Be sure to check with all three credit reporting bureaus, not just one, to get a clear picture of your credit standing. Assuring that your credit is in order can also help you to obtain a more favorable interest rate. If you are a cash buyer then you don't have to worry about doing this.
It is also important to do your research about the local market so that you do not overpay for the property you ultimately purchase. When you do purchase a piece of investment property, you need to make sure that the deal you strike allows sufficient room for a profit margin just in case there are times when you do not have full occupancy.
Carefully consider both the advantages and disadvantages of purchasing a property that could be labeled as a fixer-upper. While you very well may be able to purchase the property for far less money than other properties, in the event that major repairs and renovations are required, this investment will need both time and money to get it up and running. In this case, it would be better to find professional contractors to do the work and pay them for repairs to the property that require professional attention.
Before you purchase any property, take the time to have it inspected. Even if you have inspected the property on your own, you should still have a professional go over the property to be certain that the electrical wiring meets code, and that overall, the property is safe. An inspection can sometimes turn up problems which you might not notice but which could ultimately cost thousands of dollars to correct. You will typically be required to pay for the inspection; however, it is a wise investment that could save you quite a bit of time and money.
Take the time as well to research the local real estate market and the neighborhood. Check with the local police department to find out whether the area is safe and if you will need to provide any additional security. Drop by city hall to determine whether there are any plans for the local area that could potentially lower the value of the property. Research the real estate market in the area to find out the condition of prices. If prices have gone down recently, this could be an indication that rents will also be low. On the other hand, if home prices in the area are high, this could indicate the area is in demand that you may be able to charge higher rents.
Finally, do not make the mistake of ‘settling’ for a property simply because you are in a rush to invest in rental property. This could result in an investment that will require you to spend more time and/or money than you originally planned and detract from your profit margin.