If you’ve been looking for a stable, long-term investment in Peachtree Corners, residential rental homes might be the investment you’ve been looking for. Nonetheless, an investment property is not necessarily the same as a residence. You will need to go over a few things so that you can make sure that your first investment property is a success. Let’s get the ball rolling with the basics of buying an investment property. If you want to buy your first residential rental property, this guide will be of great help to you!
How It Works
The concept of buying an investment property is a pretty straightforward one: investors purchase a property with the intent to lease it to a tenant. This buy-and-hold model is one of the most common ways that real estate investors start their property portfolios. But, take note, though, that there are key differences in purchasing a primary residence and a rental property.
It’s not unusual for first-time investors to make the mistake of looking for a house that they personally want to live in. This is not very wise since an emotional attachment to the house can get in the way of the investment. Instead, investors use a set of calculations and market comparisons to find and evaluate properties to buy. The fair market value, the fair market rent, and your expected return on investment (ROI) — these are just a few things you want to take note of. Going through the different properties amongst the current rentals, you will be able to see which properties make for profitable ones, versus those that don’t.
Another way that buying an investment property is different from buying a primary residence is financing. It can be challenging to finance an investment property since many lenders will require a 20% down on the mortgage. Aside from the down payment, you will need cash for closing costs and repairs — any cost that relates to preparing the rental for your first tenant. It’s very important for you to begin your financing process early so that you can immediately process a rental property once you set your eyes on one!
What to Look For
You should already know what features most renters want in a rental property. You should already think about the location, size, amenities, and condition of the property and details about the local rental market. Figure out what type of people are renting single-family homes and what they might be looking for in rental homes. By researching and talking to rental property experts, real estate agents, and other housing market experts, you can get an idea of who might want to rent your property.
This begins the journey for the next bargain. To help maximize your monthly cash flows and, eventually, your resale value, rental property investors typically look for properties sold below market value. Safe to say that this will mean that the property is older and probably in need of renovations and repairs. When planning your operating budget, remember to include these repairs.
How Long Does It Take?
There are no deadlines when it comes to buying a property. Other investors can spend either a few months to a year; it really depends on your process when it comes to investing. The average time to close on a mortgage in 2020 was about 60 days; but, that’s just the closing — not including the days spent on searching for the right property. You have to factor in a lot of variables; that’s why it’s different for everyone.
It’s wise to not set a deadline for yourself. Why? This way, you can avoid rushing the process and avoid feeling pressured to buy your first property. Don’t worry; every property has its own pace and timing. Give it some time, and you will eventually find the right one for you. But, if you put in the time and research, you will be able to arrive at a reasonable bargain, and you will end up more satisfied with your investment.
If you are in the market for your first investment property, the right people can really help you get the best property. Why not give Real Property Management Greenway a call? Our team of Peachtree Corners property managers helps investors determine fair market rent, perform comprehensive assessments on potential rentals, and even help you locate off-market deals. The more you know going into your first deal, the more confidently you can become a successful rental property owner. Contact us today!
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