If you’re thinking about purchasing a rental property for investment purposes, things can get pretty complicated if you don’t know exactly what you’re doing and why. Because of this, it’s wise to spend a lot of time doing research and seeking out advice from people who have proven to be successful in owning their own rental properties.
To help you with some of this advice, here are three tips for purchasing a rental property.
Start Small
For your first time purchasing a rental property, Kathy Fettke, a contributor to FitSmallBusiness.com, recommends that you plan to start small. While you might think that purchasing multiple rental properties within one complex would be more financially wise, if you don’t already have experience here, this could prove to have you biting off more than you can chew.
Rather than potentially getting in over your head, you may want to start out with a single-family home so that you can get the hang of being a landlord and dealing with the problems of a tenant on a smaller scale. By going this route, you’ll be able to see if rental properties as an investment are really something you want to get into or if this option for investment isn’t for you.
Get It At The Right Price
Once you’ve determined that you’re wanting to invest in a property that you then rent out, the most important thing for you is to ensure that you get the property at the right price.
According to Tim Parker, a contributor to Investopedia.com, you’re going to want to purchase a low-cost home for your first foray into being a landlord. Ideally, you should look for a home that’s in an up-and-coming neighborhood so that you can expect property values to increase at a good clip over the next few years. Additionally, you want to be sure that you’re buying a home that’s not the worst in the neighborhood but also not the best, which should be helpful in getting a lower-cost home that would actually prove to be a good financial investment.
Consider Hiring A Property Manager
Depending on how involved you want to be in the entire process of owning a rental property, James Royal, a contributor to Bankrate.com, shares that you might want to consider hiring a property manager to take care of the day-to-day of taking care of your property.
By doing this, you’ll be able to avoid having to deal with the more mundane issues of renting out property. As long as you’re comfortable paying six to ten percent of your rental income to the management company, this could be a great way to essentially set and forget this investment as it slowly makes you money.
If you’re wanting to purchase a rental property, consider using the tips mentioned above to help you make all the right decisions.
