Purchasing a Keller single-family rental property for the first time can be an enjoyable experience. But, similar to all investments, there are some risks involved. To ensure that your first investment property purchase in Keller becomes as rewarding as you hope it will be, there are a few things you should think about before you buy. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property will be your priority? How will you finance your purchase? In what follows, we will look at these issues and other crucial information you’ll need to understand to make purchasing your first rental property a rewarding experience.
Define Your End Goal
When purchasing your first single-family rental home, one of the important things to do is to set clearly defined end goals. Before you begin your property search, you need to determine what qualities you are seeking in your investment property. For illustration, you may be searching for properties in a particular area with a specific number of bedrooms or minimum square footage. You can also focus on a specific renter demographic, such as college students or retirees. Understanding the fundamentals enables you to refine your search criteria and locate potential properties more quickly.
Prepare Your Finances
In addition to determining what qualities you want in a property, it is critical to prepare financially before purchasing an investment property. Industry experts recommend paying down personal debt and saving for a down payment before commencing your property search. Reduced personal debt can help you to qualify for better loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Arranging to finance in advance is another significant step, but be mindful of high-interest loans or mortgage products that seem too good to be true. By prequalifying with a credible mortgage lender, you will be prepared to capitalize on investment opportunities when they arise. By prioritizing financial readiness, you can purchase the rental property with better certainty when the moment arrives.
Crunch the Numbers
After taking these crucial preliminary steps, the search for the ideal property begins. During your search, it is critical to run a series of numbers on each possible property, such as your margins, operating expenses, and expected return. This is where a lot of new investors make terrible mistakes.
New investors must remember to include all the expenses related to purchasing and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin of 10% and a 6% return in your first year means you have a profitable investment.
Stay Objective
It is vital to keep in mind that an investment property is just that, an investment. Getting attached to a specific property or letting emotions affect your actions is not an excellent idea. What is more, the property you buy is not necessarily one you would ever live in yourself. Industry experts advise you to pick low-cost properties in high-demand areas for your first investment. But stay away from fixer-uppers unless you are a highly skilled home remodeling expert or know a reliable contractor who will finish the work for less than the going rate. Your first single-family rental property should be viewed as the first step toward a long and profitable investment career rather than the end goal. So, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
Ultimately, don’t forget that purchasing a rental property is just the first step. To ensure the profitability of your investment, you need a proactive management strategy. This is where working with a Keller property management company may help. As local market experts, property managers can help you select off-market investment properties, analyze market conditions, set rental rates, and much more. As more knowledgeable investors will testify, the right property management company is a vital partner for lucrative rental property investing.
If you have discovered your ideal investment property, make sure to hire the best Keller property management team. Contact Real Property Management Meridian at 817-678-8787 today.
Originally Published on March 13, 2020
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