Buying and managing an investment property comes with a lot of considerations, and if it’s your first time, you’ll want to weigh the pros and cons before jumping in. Start with an experienced, reputable real estate agent who can help you find both the right property and the best tenants when you’re ready. You’ll also need to think about your budget and how far away the property is from your own home, especially if you’re going to take care of upkeep and repairs yourself. Here are a few tips to help you get started.
Consider the pros and cons
There are several benefits to owning an investment property, including having a steady stream of income throughout the year no matter your employment status. Compared to other ventures, it’s also easy to get started, especially if you decide to turn a property you already own into a rental. However, there are a few downsides that need to be carefully considered before you get started. Finding reliable tenants can take time, and even trustworthy renters can leave behind damage or cleanup issues that fall on you.
There’s also the question of cash flow, as you may not be able to secure a conventional loan for a rental property. Start by taking a look at your finances and setting a budget, ensuring that you have plenty of cash to free up.
Location is everything
It’s essential to think about the location of your investment property not only in terms of a great location for tenants but also in terms of how close it is to your own residence. Even if you hire a management team to handle maintenance issues and upkeep, you’ll probably still want to be relatively close in order to handle emergencies or just to oversee the property now and then.
When scouting locations, look at the overall neighborhood and how desirable it is, how close it is to shopping, restaurants, and activities, and how easy it will be to visit from your area. If you’ll be renting to long-term tenants, it’s also a good idea to research the school district as well as any possible amenities, such as whether the area has high-speed internet capabilities. Read up on what tenants want in a rental property.
Protect yourself
When it comes to tenants, whether you plan to have long or short-term renters it’s crucial to shield yourself from liability. Any time you have individuals staying on your property, you want to ensure that you and your assets are protected in the event of an accident or injury. Fortunately, an easy way to give yourself peace of mind is to form an LLC or Limited Liability Company. Becoming a business entity involves a few steps–including coming up with a unique business name–but it can help you keep your personal assets safe in the event of litigation. Read up on the rules about how to form an LLC, and consider filing the paperwork yourself or using a formation service rather than an attorney in order to save money.
The financial aspect
When you choose to manage a rental property yourself, there is much to consider, but at the end of the day, the financial aspects are the most important. You want rent paid on time so that you can put that toward your loan and any necessary property expenses. To ensure this is a smooth process for you and your tenants, turn to a platform like Erlipro. This cutting-edge software makes it easy to provide an online payment option, and it offers expense and invoice tracking. Plus, you can also take advantage of its property maintenance and lease doc management features to cut down on paperwork and headaches.
Getting started in the investment property world comes with a lot to think about, but it’s a great way to begin building a nest egg for the future or to leave a legacy for your family. Think about how much you’ll be able to involve yourself in the maintenance and rental process, and protect yourself by utilizing the professional services of a real estate agent who can help you through the process.
Photo via Pexels
