Most people know that real estate investment has created some very wealthy individuals. That is just one of the plenty of reasons for purchasing your first real estate property.
You probably already know that where you purchase your real estate property is key, meaning that you need to decide whether a beach property or a set of condos will give you your best return. However, a note of caution to follow is this: don’t get in over your head, especially if you have no idea what you’re doing. That’s why in this blog, you can find a few tips for purchasing your first real estate property to get you headed in the right direction.
Make Sure Rental Property Is the Best Choice for You
Just because you want to make a living as a landlord doesn’t mean it’s the right fit for you. Do you know how to fix a toilet? Do you know your way around a toolbox? Of course, DIY only really works when you have one or two properties that you are renting out. However, when you have a ton, you can easily hire reputable property management in Jacksonville (or wherever your properties happen to be) to take care of them for you. You need to be absolutely positive this is what you want and that you can handle it before you make the commitment.
Pay Your Debt Down First
If you are a professional and already have properties under your belt then carrying your debt with you is fine. However, if you’re an average person that is just getting into this, you need to pay your debts down first. Debts such as student loans, unpaid medical bills, or even children that are about to be starting college can land you in trouble financially later on. It’s best to pay them down or eliminate them altogether so that your money isn’t tied up.
Get Your Down Payment Together First
It’s important to note that investment properties usually require a larger down payment than properties who have the owners still living in them. This means that these properties have stricter approval requirements as well. Since mortgage insurance isn’t available on unoccupied properties in most cases, you’re going to need to be able to put at least 20% down.
Watch Your Interest Rates
Interest rates are high no matter what you buy, but you can scour the area to find the best interest rates on the loans you get. Remember, there are quite a few costs associated with rental properties. You can find a few of those costs below.
- Possible homeowners association fees
- Landlord insurance
- Pest control
- Property taxes
- And that’s just to name a few
Avoid getting into the Fixer-Upper Trap
While it may seem like a good deal, fixer-uppers can end up costing you more in repairs than you would have paid had you purchased the property new. If you already have experience under your belt or know a reliable contractor who will give you deep discounts, then it’s fine to go this route. If not, it’s best to avoid it purchasing fixer-uppers altogether.
Go for a Low-Cost Property
Since this is your first purchase when it comes to real estate, it’s a good idea to go with a low-cost property if at all possible. The more expensive the property, the higher your costs are going to be. It’s best to start small and work your way up to more expensive homes. Some experts suggest starting with no higher than a $150,000 home as a beginning investor.
These are just a few of the top tips out there for first-time property investors. Follow these tips, be sure this is the right fit for you, and you might soon have a very profitable business going.
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