If you’re looking to buy a rental property, you’ve got to know how to go about it. Today I’ll give you a few tips on this.
“Which rental home is right for me?” This is a question I’m not unaccustomed to being asked, and I think it depends on a few factors specific to you and your situation.
One of those factors is to find a property that corresponds well with your personality and background. For example, if you have a background in handiwork or you’re a general contractor, it might be to your advantage to buy an older property and tackle the repairs yourself at cost. Oftentimes, you’ll be able to purchase the home at a great value and find untapped potential in it.
If you don’t have this kind of experience and you feel like you’d be in over your head with something older, it’d be best to purchase a newer property—not a brand-new home, but one that’s no more than 10 or 15 years old. With anything older than that, you may encounter some repair and maintenance issues.
A follow-up question to consider is, “Should I manage the house on my own or hire someone else to?” Again, if you have experience in managing and time to spare, it might be a good idea to handle the management of your property. If you intend to do it this way, you can buy a less expensive property, so that the rent you charge will pay your monthly mortgage.
However, if you lack experience and/or time, I strongly caution you against handling managerial duties and recommend you instead hire a property management company. In that case, consider buying a home that’s closer to the median price here in San Antonio. That way, it’s much easier to rent out.
I’ve also noticed an emerging trend that I’d like to touch on: An increasing number of people (namely, Realtors) are buying multiple rental properties. In theory, it seems like a great way to generate cash flow hand over fist.
Frankly, though, the best way to yield a high profit in real estate is to have a good paying job; your interest rates will be considerably lower and, if the investment is rocky at first, your employment income will help carry that investment for the first five years or so. Thereafter, you should begin to see a steady stream of passive income.
If you do own multiple properties as a Realtor, don’t make the mistake of leaving a high-paying career in favor of becoming an independent contractor. I’ve seen it happen time and time again where a Realtor pursues this path and, oftentimes, ends up purchasing cheaper properties because their credit and income are no longer as strong. Consequently, they’re unable to realize much success.
Whether you’re a homebuyer or a Realtor, take all these considerations to heart when deciding how you’ll go about buying a rental property. If you have any questions, please reach out to me. I’d be happy to help!