Steilacoom rental real estate investments can be lucrative. However, it also comes with challenges. There are some important things you need to know before you start investing in your first single-family rental property. You can make the process of buying your first investment a positive one if you learn as much as you can ahead of time.
Learn the Trade
It is important that you strive to learn as much as you can about rental property investing from those who are already doing it. Familiarize yourself not only with the procedures in buying and owning rental properties but all the details about it as well as the best practices of successful investors.
You can also start by reading some of the top books for people new to real estate investing. It is also good to join business leaders in area meetings, as well as get to know a local landlord or two. Reading about landlord/tenant laws is also a good start. The key to making your first successful investment is learning as much as you can about all aspects of buying and owning rental real estate.
Prepare Your Finances
Before buying a rental property, along with learning the trade, you should also prepare yourself financially. If your plan is to finance your investment with a mortgage, you should get your finances in good shape. Optimize your credit score, pay down debt, and have at least a 20% down payment plus closing costs saved up before your first purchase.
Since bidding on investment properties can get competitive, it is a good idea to choose a lender and get pre-qualified before making any offers. Doing this could increase your chances of getting the best deal on your first rental property.
Crunch the Numbers
When you start searching for your first investment property, there are some important calculations you will need to use to assess each one. It is important not to let emotion impact your choice of property since buying an investment property is very different from buying a personal residence or vacation home. Instead, you can use things like expected return on investment (ROI), profit margin, and operating expenses to evaluate potential properties.
Ensure that you account for all expenses, including taxes, landlord insurance, repairs, and improvements. Thorough rental market analysis for each potential property is also important to determine your expected rental rate and the strength of local demand.
Choose a Strategy
Finally, you have to consider the different investment strategies for owning rental properties. Since this will be your first investment, it is a good idea to choose an investing niche that is beginner-friendly while you are still learning about these strategies. For example, unless you are a contractor or handyman, it’s best to avoid fixer-upper properties for your first investment.
It is also a good idea to choose a lower-cost home for your first time through the process. With a lower-cost rental home, you can experience the full investment process while reducing the overall risk of your investment. This is why it is a good starting point for new investors.
There is a lot to learn before, during, and after buying your first investment property, and getting started in rental real estate investing can be both exciting and overwhelming. An expert Steilacoom property manager can ably help you navigate these new waters. At Real Property Management Imagine, we work with rental property investors to find and assess prospective rental properties. Contact us today at 360-787-4332 to learn more.
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