Investing in real estate can be a great way to generate wealth over time. Purchasing properties and then renting them out to responsible tenants allows you to generate the income required to pay the mortgage on the properties you buy.
To ensure that you don't end up with a property that ends up costing you money in the long-run, here are three tips that you should keep in mind when buying your first rental property.
1. Buy at the right price.
In order to ensure that you will generate a profit from your rental property, you need to buy at the right price. There are many factors that go into determining the ideal price for a rental property, but the biggest factor should be the amount of money that you can charge someone to live in the property.
Experts suggest that the monthly rental fee should be equal to about 1% of the total purchase price. Be sure that the area in which the property you are looking at can support a monthly rental of that amount. If the average rent in the area is higher than the 1% figure, the purchase price is right. If the average rent is lower, you will need to negotiate a lower purchase price in order to make a profitable investment.
2. Look for a home with simple construction.
While unique architectural features and interesting details may capture your attention, it's important to recognize that homes with these characteristics often don't make good rental properties.
You should anticipate having to repair or replace parts of the home after each tenant moves out. Replacing a stained glass window or finding vintage trim could be impossible. It's best to invest in homes with simple construction that will be easy to repair in the future when you are looking to buy a rental property.
3. Keep the needs of a renter in mind.
As you evaluate potential properties to invest in, you should keep the needs of a renter in mind. Most renters value ample parking and a large kitchen or bathroom.
You should also look for homes that feature a bonus room that potential renters can use a home office, nursery, or formal dining room. Homes that provide versatile living spaces will appeal to a wide audience, making it easier for you to find a tenant whenever a vacancy arises.
Purchasing a rental property to generate wealth can be exciting, but the process can quickly become disastrous if you don't invest in the right property. Ensure that the price is right, that the home features simple construction, and that it will provide enough versatile living space to appeal to a variety of tenants, and you will have a home that is sure to make you money in the future.
To learn more, contact services like Rosenblum Realty, Inc.Share