If you’ve ever considered investing in an income property, there’s no better time than the present. Experts say that low home prices plus low interest rates make this a great time to invest in real estate.
Here are four tips to help you decide whether or not income property is a good investment for you.
Talk to other investors about the situations they’ve experienced and tips they may have. Get acquainted with local regulations for landlords/tenants, you don’t want any surprises after you’ve bought the property. Although the lure of regular monthly income is strong, there are many responsibilities and challenges to being a landlord from maintenance and repair of the property to finding and dealing with tenants. Make sure that you are comfortable with this and not taking the decision lightly.
Although it may be cliché, when it comes to real estate, location really is key. Ideally, you want to spend your hard-earned investment capital on property that is in a desirable, high-rent, low-crime area. Renters will be easier to come by and you’ll be able to charge top dollar in the right neighborhood. Other points to attract potential renters would be nearby public transportation, parking, good school district, grocery stores, shopping and amenities.
Talk to a financial planner or your lender (bank, broker, etc.), about down payments and mortgage rates. Most banks require a larger down payment for a second property and mortgage rates may be different for investment properties than for your primary residence. Think about how much you will need for renovations to the property before renting it or between tenants and also consider that you will have to make the mortgage payments between tenants and there are no guarantees on how quickly you will be able to find the perfect renters. Landlord insurance is also a must and should be factored into your finances.
There are a number of people whose support you will need, on the road to becoming a real estate investor. A real estate agent who is experienced in investment property deals will take you to see the best properties for you. A lawyer can draft a rental agreement for you and help you with tenant issues, should they arise. An accountant can help you navigate the ins and outs of how your investments affect your taxes. A handyman or home improvement specialist can handle the maintenance and repairs of the house. A local building official can explain regulations and permits that may be required in rental properties.
If you’ve invested in real estate and want to turn a house into a great income property, talk to you local home improvement expert or general contractor who can help you bring the house up to code and make it ready for lease in no time.