If you’ve ever bought a house, you know how long and frustrating it can be. The early enthusiasm of checking out houses is quickly overrun by offers falling through, meeting with realtors all throughout the city and trying to find a loan. When it all comes to an end, you can’t even rest easy as you’ve got to start the moving process. Buying rental property can be tough yet fulfilling. It’s something that many experience, but also something that few look forward to doing.
There are quite a few people out there who are not looking for property to purchase and live in, but property to rent (it seems like there are more of more of them every day!). If you’re one of those people, you might be curious about the process and basic steps you should take. Here are a few tips to help you out when buying rental property.
Buying Rental Property: 5 Tips to Help You Make The First Purchase
Trying to find a property to rent can prove to be a challenging process. These tips should make buying rental property for the first time a tad easier.
1) Leave No Doubts When Buying Rental Property
Owning a rental property is a huge step for anyone, especially for first-time property managers. Before you start this process, you want to be 100% sure this is a road you want to travel down.
There are more things that we’ll delve into later about being a property manager. Unfortunately, you simply can’t just buy it and wait for a wild tenant to appear. There is a lot of work that goes into your property both before and after making the purchase.
2) Find a Solid Realtor
Yes, just like searching for your own home, you’ll want to work with a realtor. This is important for buying rental property.
Find a realtor that:
- has experience working with a rental property, instead of one that simply works with residential areas
- will be able to help navigate you through the slightly different processes that come with purchasing rental property
- can keep you focused on your objective
That doesn’t mean you should always do your own research first. But, it’s always good to stay ahead of the game!
3) The Golden Rule When Buying Rental Property
You don’t have to be a real estate wiz to know that the most important rule is…. “location, location, location.” Always consider this rule when buying rental property. When you’re searching for a rental property, you want to make sure you’re purchasing in a prime location.
Your city may or may not have a growing housing market and you need to be aware of how you quickly or not you’ll be able to find a tenant. If you’re lucky enough to be in a major city, finding a tenant may take no more than a week.
If the property was vacant before you bought it, consider these questions:
- Why was it vacant?
- What can you do to make it attractive?
- Are you in an up and coming area?
There will surely be a period of time where you go without a tenant, but how long will you be OK with it staying vacant? That is important to ask yourself before buying rental property.
4) Show Me The Money
Just like home loans, there are plenty of loans for rental properties out there. Finding the right one for you may take some time and a bit of patience.
Rental property loans are different from their loan brethren. To qualify for some home loans, you only need to put down as little as 3%. That won’t fly with rental properties, as 20% is often the floor. After that, there are many different types, ranging from fixed to variable and in length.
Some people go after the rental property as a way to escape out of debt. Hint: that’s a very bad idea. You’re likely to lose money and dig yourself into an even deeper hole. If you have your eyes set on being a real estate mogul, make sure you have everything else paid off first.
5) Honest Labor
As stated above, owning a rental property is much more than buying a rental property and planting a “for rent” sign in the front yard or street corner. If you’re fortunate enough to have the rental property move-in ready, that’s great! If not, are you willing to do the dirty work?
You can easily hire someone to come repaint the bedrooms or tear up the carpet, but it’s going to be much cheaper if you do it yourself. You might not be the handiest of people, but it’s certainly going to help if you can take care of the major projects yourself.
What about when something inevitably breaks? Are you going to be the first person on the scene, ready to fix the issue or will you be making a call? Consider all of this during your process of buying rental property.
Buying a Rental Property: These Tips and You
There is much to consider when buying rental property. You shouldn’t jump into a project of this nature without doing proper research. It may end up hurting you in the long run and making the experience a hectic one for you. Don’t let that person be you. Use these tips to your advantage when you’re buying rental property.
Are you prepared to buy your first rental property?
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.