If you’ve been looking for a stable, long-term investment in Doral, residential rental homes might be the investment you’ve been looking for. However, buying an investment property is not the same as buying a residence. There are a few key details to know in order to ensure the success of your first investment property. 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. Remember, though, that buying your primary residence is not necessarily the same as buying a rental property.
First-time investors usually fall for the mistake of wanting to live in the property that they want to invest 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. Once you observe the different properties listed in the current rentals of your neighborhood, you will be able to tell which ones are profitable for rentals.
Another way that buying an investment property is different from buying a primary residence is financing. What most investors find challenging about financing an investment property is that it usually requires a 20% down on the mortgage. After making your down payment, don’t forget to save some cash for the closing costs, as well as repairs and other necessary expenses for the rental to welcome its first tenant. This is why it’s important to get a head start on the financing process — so that when you come across a rental property that you want, you can immediately make your move.
What to Look For
It’s wise to already have an idea of what features people generally want in a rental property. These features include 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. You can find out what kind of renters you might be having and what they look for in a property, by researching and talking to rental property experts, real estate agents, and other housing market experts.
Then, the bargaining game begins. To help maximize your monthly cash flows and, eventually, your resale value, rental property investors typically look for properties sold below market value. This means that the property will most likely be older and in need of renovations and repairs. Remember to include these repairs in your operating budget.
How Long Does It Take?
Buying a property is a big decision. Don’t rush yourself. 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. However, that’s not including the time it takes to search. There are so many things to consider when investing in these kinds of things.
It’s important to note that you should avoid rushing the process because you feel pressured to buy your first property. This often happens when you set a personal deadline. 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, let our team of experts guide you through the entire process! Why not give Real Property Management Dade a call? Our team of Doral 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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