Real estate can be a huge and rewarding investment if you find the right property to purchase. However, there are many things to keep in mind before you dive head first into your first investment. Read on to learn more about how to successfully acquire a rental unit.
- If you are not planning to pay cash for the property, one of the first things you should do is set up a meeting with a mortgage lender. If you aren’t sure who to use, ask your realtor for suggestions. The lender will help you determine how much you can afford to purchase, how much you will need to save as a down payment on a rental property and can get you started on a pre-approval which you will need to make an offer. They can also give you advice or refer you to someone who can help you improve your credit score if that if that is an issue.
- Start small and look for something that is manageable. Whether you choose to use a management company or do everything yourself, this is a whole new process for you and there is a lot to learn. Don’t try to accumulate a bunch of properties all at once before you have a solid business plan in place and have gone over all the management details.
- Talk to a real estate lawyer before drafting up a lease. You don’t want to find yourself in a situation where the tenant moves out unexpectedly and is off the hook for the remainder of the lease. You will also want to get some advice or do your research on companies your can use for a background check or credit check to go along with your rental application.
- Speak a real estate broker about which areas would be good to invest in. You want something that will increase in value and remain in a nice area over the years. They can help you figure out how much you would need to purchase the property for and where to set the price of rent in order to stay in line with the neighborhood and make a profit long term. They can also help you determine which properties would need more work than they are worth before you sink all your money into a bad investment.
For more information and helpful advice, check out our other articles on the blog!