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A real estate property is one of the most lucrative investments you can ever have. No wonder, many of the wealthiest people in the world are engaged in the business of buying real estate properties and renting them out.
While there is no doubt that a real estate property is a sound investment, being in this business requires mastery. Just like any other investment, you need to learn the ropes of this business before risking millions of dollars buying real estate properties. Here are some important tips you should consider when buying your first rental property:
The easiest way to get started as a real estate investor is by investing in single-family homes. Aside from the fact that maintaining a single-family home is easier than maintaining a multi-family property, there also tends to be less wear and tear when you only have a single tenant than when you have more. If you live in Clovis CA or anywhere near the area, you may find that most of the Clovis CA homes for sale are single-family homes that are ideal for first-time investors.
Before diving into the real estate business, make sure that you know the mortgage market really well. This is because getting the right mortgage will help keep your costs low. Using leverage to purchase a property can also help free up some of your money so you can use it for future repairs. However, since mortgage also involves financing costs, it is still best to consult with a Clovis CA realtor.
Rental properties generally have stricter approval requirements and require a larger down payment compared with properties that are occupied by their owners. While 3 percent down payment usually works for your own home, the case is not the same for an investment property. Since mortgage insurance is not available on rental properties, the down payment for these properties is typically at least 20 percent.
If you want your first rental property venture to work, it is necessary that you screen your tenants very well. You can do this by doing a background and credit score check, as well as looking into the landlord-tenant records in your area. You may want to lay out a set of criteria so you will know if the person who is interested to occupy your property is a qualified tenant and will not stress you out in the future.
To make the most returns, real estate investors commonly get low-cost homes. Because of that, some get tempted to get a home that they can get at a bargain and flip into a rental property afterward. The catch, however, is that these homes usually need major improvements and will require you to spend a lot on renovations. Instead of buying a fixer-upper, purchase a property that is not as cheap but only needs minor repairs.
Investing in a real estate property involves a huge amount of money so make sure that you take the necessary precautions before you dive in. If you need help with your first rental property investment, call me today at 559-246-8991! I am Jason Nenadov, Clovis CA’s top Realtor®!
In case you can not view this video here, please click the link below to view Tips for Buying Your First Rental Property on my YouTube channel: https://www.youtube.com/watch?v=e4E5y3pttAA&feature=youtu.be