Buying your first Sterling Heights single-family rental property can be an amazing experience. However, there are certain risks involved, just like some investments. There are a lot of things you need to be aware of before you make your first investment property purchase in Sterling Heights to guarantee that it will be profitable as you hope it will be. 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 main focus? How will you finance your purchase? In what follows, we’ll discuss not just these issues but also several important details you’ll need to know to make purchasing your first rental property a rewarding experience.
Define Your End Goal
When searching for your first single-family rental home, one of the most important things to bear in mind is to set clearly defined end goals. Before you start your property search, you need to spend some time thinking about what qualities you are looking for in your investment property. For instance, you might be looking for properties in a particular area with a specific number of bedrooms or minimum square footage. You can also concentrate on a specific renter demographic, such as college students or retirees. If you are aware of the details, you will be able to refine your search criteria and locate potential properties faster.
Prepare Your Finances
Along with identifying what qualities you are looking for in a property, it is necessary to prepare financially before you obtain an investment property. Industry experts recommend paying down personal debt and saving for a down payment before starting your property search. Reduced personal debt can help you to qualify for more desirable loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Preparing to finance in advance is another essential step, but be watchful for high-interest loans or mortgage products that seem too good to be true. By prequalifying with a respectable mortgage lender, you will be ready to seize investment opportunities as they occur. By prioritizing financial readiness, you can more assuredly acquire that rental property when the moment arrives.
Crunch the Numbers
After taking these essential preliminary steps, the search for the right property begins. One necessary thing to consider during your search is that you should run a series of numbers on every potential property, such as your margins, operating expenses, and expected return. This is where a lot of new investors commit critical errors.
New investors need to keep in mind 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 critical to keep in mind that an investment property is just that, an investment. Getting attached to a specific property or allowing emotions to control your decision is not advisable. Also, the property you buy is not necessarily one you would ever live in yourself. Industry experts endorse picking low-cost properties in high-demand areas for your first investment. But avoid fixer-uppers unless you are a highly skilled home remodeling expert or know a great contractor who will perform the task for less than the going rate. Your first single-family rental property needs to be taken as the first step toward a long and profitable investment career rather than the end goal. This way, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
Finally, take into account that buying a rental property is just the first step. You need a proactive management strategy to guarantee that your investment will be successful. This is where getting aid from a Sterling Heights property management company can be useful. As local market experts, property managers can help you locate off-market investment properties, analyze market conditions, set rental rates, and much more. As more seasoned investors will tell you, the right property management company is an invaluable partner in profitable rental property investing.
After you have identified the best investment property, the next step is to search for the best Sterling Heights property management team. Contact Real Property Management Silverstone at 586-992-6419 now.
Originally Published on March 13, 2020
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