Top Tips for Buying a Rental Property
It seems at least once a week our company is introduced to someone interested in getting started in real estate investing. Sometimes they’re younger and sometimes they’re older, but regardless of the demographic they are taking positive steps to build wealth through real estate, which is amazing to see.
As both a realtor and a property management company we’re often asked what are some of the fundamentals required for determining if a particular property is aimed to be a great rental property.
With that being said, here are a list of 5 of the things as an investor you should be looking for.
Here are the top 5 things to look for.
1. Ensure Being a Landlord is for You
How handy are you? A lot of investors start out by wanting to complete every repair but soon grow tired of it. If you’re handy that’s great, but if not, you will need to pay for those repairs. If that’s the case, you need to start to find a reliable power team.
At the same time, you need to be able to delegate tasks and know when it’s not worth your time or resources to do something yourself.
2. Pay Down Debt
Experienced investor knows how to manage their debt, but if you’re just starting out you should try to be as close to debt-free as possible. Student loans, personal debt, or helping your kids with their own education may all be reasons to hold off on investing. In fact, the decision may be made for you because if your debt to income ratio is too high, you won’t be able to get a mortgage.
To figure out your debt to income ratio simply add up all your monthly debt payments and divide the sum by your gross monthly income.
3. Put together the Down Payment
If you’re going to be buying an investment property then you’re going to need a larger down payment than the one you’d need for a comparable primary residency. A majority of rental properties require the investor to put 20% down as a down payment, sometimes some lenders even ask for more. You need to save!
4. Find the Right Location
Location, Location, Location!
But which one?
Look for low property taxes, as good a school district as possible, low crime rates, a growing job market, and amenities such as green spaces, malls, restaurants, movie theaters, and potential local attractions.
5. Talk to the Neighbours
Talk to your potential neighbors. Let them know you’re thinking about buying a house and ask them if they’ve ever had any difficulty with the owner or the tenant. Also, drive around the neighborhood at various times of the day and during different days of the week to get a feel for what the area is like.
These are just a few of the tips we often educate our clients when looking for the right investment property. If you’re interested in learning more about this or how Welcome Home Management might be able to help, feel free to reach out to us. We’d be happy to help.
To our Mutual Success,