You’ve weighed all of the pros and cons, thought about it for months and read every reference material you could get your hands on. In short, you’re ready to purchase an investment property and you’re ready to do it now. However, how can you get started?
1. Know what type of property you’d like to purchase. Would you like to rent out a home to a nice family or buy an apartment building for several tenants. Decide what you would like to buy before you go looking. It will save you time in the long run.
2. Once you’ve located a property, try to get the most for the least amount. Spending the money to have an inspection done will allow you to have more chips at the bargaining table, especially if you can repair things yourself or have associates that can do it cheaply.
3. Put an offer on the property and secure financing. Obviously, this is an important step. Once you’ve agreed to the terms of the sale and secured the financing, you are set.
4. After the property is yours, you’ll want to make it appealing for potential tenants. Make any necessary repairs, install new carpet and paint the walls. Tenants look closely at these details and it can be a make or break deal.
5. Price your property right. Think about what you’d like to charge for rent, taking mortgage costs, utilities and maintenance into consideration. Then take a look at what similar properties in your area are renting for. If you are considering putting rent at $1200 per month when others are renting their property for $1000, find out why their rent is cheaper and make adjustments accordingly. Don’t price yourself out of the market or you’ll risk having a vacant house.
6. Visit with a lawyer to draw up a leasing contract. You’ll want to make sure all terms are spelled out before taking on tenants. What happens if something is broken or ruined during their lease? Who is responsible for the repairs? What happens if a crime occurs on your property? You’ll want to spell out liability to protect yourself and your investment.
7. Figure out what you’ll do if the home is vacant for an extended period of time. How will you cover your costs if you have no tenants.
All of these are important factors to consider before taking on your first property and tenant. Remember that you want to make this a positive and possibly money-making experience. If you don’t have a plan in place before the unexpected occurs, you could face losing a lot of money in the process.
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