Rental Property Investment 101: Tips To Get You Started
Due to the COVID-19 global pandemic, people around the world were monetarily impacted by drastic changes within the economy. Because of this, people had to find new and innovative ways to generate income to keep up with the regular finances.
As an alternative investment strategy, people were looking towards expanding their portfolios to steer away from the stock market and decided to invest in rental properties.
According to CNBC, the national median rent has increased throughout 2021 by 11.4% and is expected to increase even more. Investing in rental property, especially now, can be an incredibly lucrative means of passive income. However, many people don’t realize how much work is actually required when you are getting started.
If you are considering investing in rental property, here are a few things you might want to know first.
You Should Work With a Property Management Company
The logistics behind being a landlord are more than what we could cover in a simple blog. There are legal tenant lease agreements that need to be drawn up, listings that need to be posted on various platforms, and proper market analysis of the property you intend on purchasing to rent.
This is why we always suggest working with a property management company to be able to handle most of this legwork. That way, you don’t find yourself caught up in a legal battle with a future renter because you didn’t perform a proper tenant screening or are dealing with unfortunate eviction situations properly.
When you first start doing your search for a property, you will want to start looking for a rental property in an up-and-coming area. This can seem like a loaded concept because there are many different factors to consider. San Antonio, for instance, has been rated as one of the most stable markets for investing in rental units and properties throughout the United States as of 2020.
This is because Generation Z, individuals who were born in the mid to late 1990s, are the most active renters in the area and are looking for places while they are in college or starting their careers.
Most likely they aren’t ready to purchase a home; not to mention the cost of owning a house in San Antonio has dramatically increased, making it unaffordable for many people living in the area. This makes San Antonio a great location for investing in rental properties.
Do your research when looking for the right location to invest in. You don’t necessarily have to live in the area you are looking to invest in, although it could be very helpful as a newbie in the business.
Work With a Broker or Lender
Before you head to the bank to apply for a loan, you will want to speak with a trusted financial advisor first. Working with a broker or lender will help you learn about the different types of loans available and what your overall budget looks like.
A big misconception in the rental property investment world is that people think they can utilize a regular home mortgage to be able to finance their rental property. However, this isn’t necessarily the case if you don’t intend on living in the home you are renting and setting it as your primary residence.
Starting out on your journey of buying a home as a rental property is exciting, but that doesn’t mean you should jump right into the mix. Do your research and when you are starting out, always talk to professionals.
They have the knowledge, experience, and tools to be able to make your rental property a success. Rental properties aren’t cheap and you will want to be able to make the most profit out of your investment.