If you want to invest your savings in real estate, now might be the perfect time to do so. Towards the end of 2019, we saw a shift in millennial housing trends as the number of millennial homeowners grew. However, because of the economic uncertainty amid the pandemic, the growth halted, and many are back to living in rentals. In this article, we bring you tips for investing in rental properties.
Look for What You Know
Rental properties vary by state, area, property type, size, and more. If you are a beginner, chances are you have minimal knowledge about real estate. We suggest you stick to what you already know. So if you live in a single-family home, you might be better off investing in another single-family home. You will know what works and what doesn’t as well as what people look for in single-family homes.
Use Leverage to Make the Purchase
Not everyone has enough cash to purchase real estate and then have enough left over to tend to the necessary repairs and cover marketing costs. Make sure you first look at mortgage deals, and if you find one that suits you, we suggest you go for it.
However, you need to have a solid plan before you decide to take on a loan. Where it can help you cover the costs temporarily, it can also become a financial burden if you don’t have the means to pay it back.
Have a Marketing Plan
Don’t just buy a property because it is cheap, or it’s all that you afford. Ensure you know the ins and outs of the neighborhood and are well aware of its marketable aspects. Having a marketing strategy in place also helps you shortlist and sift through different properties. You want to find one that is readily marketable and has many features that can attract quality tenants, and the neighborhood is just one of them.
Calculate Your Return on Investment
Contrary to popular belief, you don’t need a high-end property to get the maximum return on investment. You can also get great deals on properties in transitioning areas. Make sure you have your market research at hand and are well aware of how much the houses are selling for in that area or what is the monthly rent before you buy it.
It’s not worth the effort if you end up spending thousands of dollars on repairs on a house that’s going to get you peanuts.
Have the Money at Hand
Don’t go around looking at houses in the market if you don’t have cash at hand. Make sure you apply for a mortgage first and then start your hunt. Sometimes making an early deposit can also get you a substantial discount. It also reduces the chances of you losing the house to another buyer.
Look for Turnkey Properties
Fixer-uppers are risky business, and we suggest you stay away from those in the beginning. They require a lot of time, effort, and money, and sometimes they aren’t worth it. Look for turnkey properties that will provide you immediate and steady returns.