Tips for Investing in Rental Properties
Investing in real estate has great potential for passive income. It can also be part of your retirement planning by selling the home and getting a big chunk of equity.
It also comes with risks.
So I wanted to share with you some of the things that I have learned when it comes to knowing the local real estate market and the real estate agents who specialize in working with real estate investors.
- Know what’s happening in your area – Are people moving into your area because of job opportunities? Are people retiring there? Are you in a vacation area where you can buy short-term rental homes? Do you want to buy a duplex or four-plex home, live in one of the units and rent out the others?
- Understand the costs involved – In addition to a mortgage payment, taxes and insurance, you will need to budget for repairs, landscaping/snow removal.
- Long-term or short-term investing – Investing in real estate can help you build your wealth over the long term. Or buying fixer-uppers and selling them immediately can give you more cash over the short term. You will need to decide which one is right for you.
- Know all of your financing options – the mortgage rules are different in regard to the down payment, the closing costs and interest rate. I can help you decide which loan program would be the most advantageous for you.
- Know your numbers – Cash flow and income tax rules can benefit you when you invest in real estate. That’s where a great accountant/CPA can help you determine if the numbers work for you and your tax bracket. (I can recommend one to you.)
- Build your own real estate investment team – Even if you are only considering buying one or two rental properties, it’s best to work with people you can rely on to give you good advice. A real estate agent who specializes in working with investors (I can recommend some to you), a property management company (if you don’t want to manage your own), and a network of contractors who will help you if the home needs to be repaired.
If you are interested in exploring the possibility of investing in real estate, please let me know and we can set up a time to talk and I can introduce you to an awesome Realtor.
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