Obtaining your first Keller single-family rental property can be a thrilling experience. Investing carries risks similar to those of any other investment. Before making your first investment property purchase in Keller, you need to thoroughly understand several crucial factors to ensure that it will be lucrative as you desire. To succeed in purchasing your first rental property, you need to clearly understand certain factors, such as your target tenant demographics, the type of rental property you wish to invest in, and how you will finance your purchase. This article will dig deeper into these essential aspects and equip you with the necessary knowledge to ensure a fruitful first rental property.
Define Your End Goal
When you buy your first single-family rental home, it is vital to establish clearly defined end goals. It is wise to spend some time determining the characteristics of your investment property before you start your property search. An illustration for this would be searching for properties in a particular area with a designated number of bedrooms or minimum square footage. Alternatively, you can direct your attention to a specific renter demographic, such as college students or retirees. By knowing the specifics, you can refine your search criteria and locate potential properties faster.
Prepare Your Finances
In addition to identifying the specific characteristics you desire in a property, it is vital to prepare financially before you purchase an investment property. Before starting your property search, it is advisable to settle your personal debt and save for a down payment. Lowering your personal debt can increase your chances of securing better loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. It is crucial to plan financing beforehand, but be cautious about high-interest loans or mortgage products that seem a little too good to be credible. By obtaining approval from a trustworthy mortgage lender, you’ll be well-equipped to capitalize on the investment opportunities as they arrive. When you prioritize your financial preparedness, you will have greater assurance to purchase rental property when the opportunity arises.
Crunch the Numbers
Now that crucial initial procedures have been carried out, the search for the right property commences. One important thing to remember during your search is that you should run a series of numbers on each prospective property, including your margins, operating expenses, and expected return. This is where a lot of new investors make critical errors.
New investors sometimes fail to factor in all of the costs related to buying and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. According to professionals, a margin goal of 10% and a 6% return in your first year means that you have a profitable investment.
Stay Objective
It is important to remember that an investment property is just that, an investment. It is unwise to become emotionally invested in a specific property or let feelings dictate your decisions. Furthermore, the purchased property may not be personally suited to your living standards. For your first investment, industry experts suggest investing in low-cost properties in high-demand areas. If you’re not a seasoned home remodeling expert or don’t have access to a reliable contractor who charges less than the market rate, it is best to avoid fixer-uppers. Your first single-family rental property should be seen as the initial stride towards a long and profitable investment career rather than a final objective. By doing so, you can maintain a steady course and keep your investment properties in the black.
Design a Management Strategy
Finally, keep in mind that buying a rental property is just the first step. To ensure a profitable return on investment, you must have an effective and forward-thinking management plan implemented. This is where hiring a great property management company can help. As local market experts, property managers can assist you in identifying off-market investment properties, analyzing market conditions, establishing rental rates, and much more. Experienced investors often emphasize the importance of having a competent property management company by your side for profitable rental property investing.
If you have found your perfect investment property, ensure that you choose the best Keller property management team. Contact RPM Meridian at 817-678-8787 today!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
