Investment Rental Property

How to Buy an Investment Rental Property: 9 Things You Should NOT Avoid

Thinking about buying an investment rental property? Do not invest until you consider these things.
Rental properties are wonderful investment vehicle to earn passive income. But if you’re just starting out as a real estate investor, finding the ‘right’ investment rental property and knowing its true worth could be difficult at first. Simply consider these simple rules find a rental property that will make you wealth.
Consider these 9 crucial things before buying an investment rental property:

1 – Location. Find a rental property in Dallas Tx at a good location. The busier and popular the location, more buyers will visit and rent it. Avoid purchasing a property in ‘remote’ as few people will likely visit the place.

2 – Price. Look for slightly high-priced rental properties as it creates a ‘rental demand.’ When someone likes the property but cannot afford it, they’ll have no option but to ‘rent’ the property because it’s located in a great place.
Higher rental demand means that you can set higher rental fee for the property and earn more passive income that will pay off your mortgage rates yet still make significant amount of savings each month.

3 – Rental track record. Before purchasing a rental property, ask the current owner to show the rental history. The rental history of a property will help you figure out whether a property is worthy of your investment. For example, if people are residing there for a longer period (5-7 years of time), that’s a good indication that the place is convenient, safe, and affordable for the tenant. Likewise, if the rental payment is on time, that’s an indication that tenants are good people who’d like to stay at the place.

4 – Do the math. Basically, the goal of investing in rental property is to earn a steady income through rental fees. If the property does not earn a steady income, it will not be worthy of your investment because sooner or later you’ll go out of business. In order to ensure that the rental property will produce a positive cash flow, you’ll need to calculate how much you’ll save in the end. If the savings is nothing less than several thousands of dollars a month, you should look somewhere else.
Include all expenses into your calculator such as the monthly mortgage payment fee, maintenance costs, taxes, insurance, management fees, and reserves that incurs while purchasing and managing the property. For example, you may need to budget sufficient amount for reserves. Set aside $100 and $200 a month for small unit and large unit respectively that will cover replacements, remodeling, and vacancies expenses.

5 – Good neighborhood. The neighborhood has to be stable as well as showing signs of improvements. It’s great to buy a rental property in a stable neighborhood, but also consider other neighborhood showing signs of improvement.
This way, not only the units rents more easily and fast, but you’ll also automatically increase its value over time.

6 – Housing and zoning codes. Ask your local attorney if your potential rental property has any legal issues pending. Clear it before purchasing it.

7 – Buy below market rents. Next, find a rental property with lower-market rent. You can remodel it and fix minor problems and raise its rent. When you raise rent, you automatically increase its value.

8 – Find newly built property. Look for newer homes to avoid purchasing a property that does NOT comply with housing/building codes or severely needs a makeover. Rental homes that are less or equals to 20 years old are perfect.

9 – Out of state owner/manager(s). Try to purchase a rental investment property from property managers living outside the country, or even the state. The fact that they’re living outside the state means they won’t be able to look after their property like someone who lives just few blocks away from their investment properties. In fact, many of these property managers may be in the verge of selling their rental properties quickly rather hold on for few more years and sell it for profits. Purchasing a property from managers living outside the state could mean you’ll likely get the best deal now.

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