Investing in rental property is one of the proven ways of creating wealth. The real estate realm has produced some of the wealthiest men in the world. Frankly, if anyone follows the right tactics while investing in this industry, the returns will be handsome. Indeed, the real estate industry is the best place to start your investment journey.
However, rental property acquisition is not a walk in the park unless you’re using the famous property finder Doha. Experts say that there are a couple of approaches that work, while some never yield any positive returns. Thus, if you are unsure about where to start, read on to learn about the seven steps to finding your first investment property.
Pay any Personal Debt.
Many expert investors have revealed various ways to leverage debt. However, this strategy may not always work for everyone. Besides, first-time investors may not know how leveraging debt works. Therefore, you should try to pay down your debt and understand how to work everything out.
Before venturing into the real estate realm, make sure you have settled any medical bills, student loans, and other colossal expenses that may derail your plans. Once you’re done repaying the loans, you can now follow the steps to secure your first investment property.
Assemble Your Team
Fact that you are new in this industry, it would be nice for you to surround yourself with a group of experts. You can first look for a local real estate agent. These experts have the required knowledge when dealing with investors, and they will guide you accordingly.
Remember, looking to buy a rental property is entirely different from searching for a home.
Ideally, property investments call for consideration of various factors that may or are never applied in home buying. Some of the experts you may need around you are a local real estate agent, appraiser, home inspector, estate attorney, and insurance agent.
Consider the Right Location
All areas are not the same. Some may be picking up in terms of property development, while others are dormant. Always consider spots where the population seems to be growing. Besides, a city or, say, a locale where you can see some revitalization plans being undertaken may be an ideal spot to invest.
Also, consider places with decent schools and various excellent amenities such as restaurants, parks, shopping centers, etc. Social issues such as crime should be regarded because no one wishes to live in a place where they might get robbed anytime.
Opt for the Ideal Payment Method
So now, how will you pay for your property? Well, buying property is an investment that should bring in some passive income. First, you can decide to make use of your savings though they may not be enough.
You can still take a mortgage if you can manage it. If you want a bank financing option, most of them charge a down payment of 20 percent. You have to prepare to pay the said amount before the bank could carry the burden for you.
Factor in Unexpected Costs
Before anything else, you need to factor in the maintenance and upkeep costs. You will need cleaners and security firms to keep it clean and safe. But emergencies may occur anytime.
Some natural or human activities may render the premises unlivable. At this juncture, you must make the required quick moves. Repairs may not always be cheap. So, you need to set aside 20 percent of your rental income to take care of any unexpected expenses.
Know Your Legal Obligations
Various laws govern how property investments are run in your country or locale. Such may include eviction rules, security deposit acts, fair housing, and lease requirements, among others. Do not despise them and think everything will be okay when you break any of them.
So, familiarize yourself with the landlord-tenant laws in your state, town, or city. This way, you will have avoided any potential legal hassles that may, in turn, cost you vast sums of money.
Calculate Operating Expenses
When undertaking the operating expense, it’s best to use the 50% rule. If, for example, you charge $3000, you should be paying $1500 in total expense.
From the steps above, there is a lot that you should do to avoid disappointments and reap valuable benefits. Do not try to trudge alone in this tricky industry; you’ll require a team of professionals to help you all through.
Also, find an ideal payment method, and make sure to put aside some of your earnings to cushion yourself from unexpected costs.
The other step is to understand all the obligations of the landlord-tenant relationship. If you can manage the property, that’s okay. But it’s recommended to have professionals handle that part on your behalf. Ideally, hiring a property management company is one of the brightest moves you can ever make as an investor.
Lastly, ensure that you follow any advice given by the real estate experts in your team and feel free to ask any questions to comprehend the processes.