How To Invest in Rental Properties
What Is An Investment Property?
An investment property is a home or apartment complex that a person purchases for the express purpose of renting it out. Depending on where you live, city rules and regulations might mean you can only rent to people in a long term or month to month lease, or you might have greater flexibility to rent out your property as a vacation rental like an AirBnB, VRBO, or equivalent.
If you’re newer to investing, you can think about looking into purchasing a duplex or a triplex. Especially if you plan to manage the property yourself, you won’t want to be overwhelmed by twenty units to manage with way more tenants than you can handle. If you’re a more experienced investor and if you can afford a property manager, you can look into larger complexes for exponential investment potential.
How To Find an Investment Property
It’s always a great idea to find a real estate agent with experience in investment properties to make sure you get the best value for your money. Your real estate agent can also advise you on things like finding the right neighborhood, and which properties might be best for you.
Finding The Right Neighborhood
One of the most important aspects to consider when looking for a rental property is the neighborhood. Buying a rental property in an area might not be the best investment, nor will buying an income property in a run down area where you might constantly have to make repairs and security upgrades. Your real estate agent will be able to help you determine the hottest areas to invest in and the best properties within them. Repairs and Renovations
Buying a fixer upper single family home is one thing, but an investment property in need of repairs is a whole different ball game. If you’re having to make constant repairs for tenants - or before you even go to rent it out - this can severely harm your bottom line.
To Manage, or Not To Manage?
You will also need to decide whether you want to manage your property yourself or if you want to hire a property manager or property management company. Both have their advantages and disadvantages - by managing it yourself, you save money, but will have to take more of your time to help tenants, and vice versa.
One of the most important aspects to consider when looking for a rental property is the neighborhood. Buying a rental property in an area might not be the best investment, nor will buying an income property in a run down area where you might constantly have to make repairs and security upgrades. Your real estate agent will be able to help you determine the hottest areas to invest in and the best properties within them. Repairs and Renovations
Buying a fixer upper single family home is one thing, but an investment property in need of repairs is a whole different ball game. If you’re having to make constant repairs for tenants - or before you even go to rent it out - this can severely harm your bottom line.
To Manage, or Not To Manage?
You will also need to decide whether you want to manage your property yourself or if you want to hire a property manager or property management company. Both have their advantages and disadvantages - by managing it yourself, you save money, but will have to take more of your time to help tenants, and vice versa.
Conclusion
If you’re looking to invest in real estate, make sure you consider all of the above criteria before choosing a property.
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