Buying a rental property is a major investment that can pay off in a big way in the long run, so long as you do your research and make sure you’re actually making a smart purchase. If it’s your first time purchasing a rental property, it’s natural to have some anxiety about it. You might also look into fix and flip financing in Roswell, GA if you’re looking at a fixer-upper.
Here’s a quick overview of some tips that will help you feel more comfortable with purchasing your very first rental property:
- Get financing early: If you’re using a mortgage, get pre-approved early and make sure you know how much you’re approved for. You’ll also want to consider your options early on, including 15- versus 30-year mortgages and fixed versus adjustable rates.
- Invest in a single-family home: It’s generally recommended that first-time rental property investors invest in single-family homes first. The maintenance will be much easier than commercial or multifamily properties. You’ll also only have one tenant to worry about, meaning you don’t need to worry about as much wear and tear or potential issues popping up at the property. It’s a good way for you to test out being a landlord to see if it’s something you’d like to expand on, or if one single-family home will be enough for you.
- Aim to be cash flow positive: For a first-time rental property owner, it’s important to only purchase a property that will generate a positive cash flow. You should make sure you’re putting enough money down to be cash flow positive. Keep in mind that there will always be some unexpected expenses that arise whenever you’re a property owner. The more you are able to put down, the more margin for error you have with these unexpected expenses, and the more of a safety net you have if tough economic times arise.
- Use experience to your advantage: Try to buy a rental property in a niche and area with which you are familiar. If you’re an alumnus of a university, you can try purchasing a student home near the campus. If you’ve lived in a particular neighborhood for a long time, you might consider purchasing another home in your neighborhood to rent. Being able to draw on your experience in the area can make you a better landlord and make it easier for you to market your property.
- Consider your living situation: We mentioned that purchasing a single-family home is the best way to go for first-time investors. However, if you are in need of a new living situation yourself, you might consider a multifamily property you can live in while renting out the other unit(s). It’s fairly common for new homeowners to purchase duplexes, rent out one of the units and use that income to pay the mortgage while then looking for new properties.
These are just a few tips that will be of use to you as you begin searching for your first rental property. If you’re interested in learning more about how you can obtain fix and flip financing in Roswell, GA for your rental property, contact Silliman Private Lending today.