Are you thinking of investing in rental property? Before making any decisions, you should know both the risks and rewards that come along with it. Real estate can provide many benefits, however, it is best to be well-versed before spending thousands of dollars. Here are our top 3 tips on rental property.
1. Find the Right Location
The last thing that you would want is to be stuck with rental property in a declining area. Always remember that location is everything, so you should do a good deal of research before jumping the gun. Look for a city or town where you see the population growing and a plan to revitalize the area. Some key items to be on the lookout for are:
- Locations with low property tax.
- Great school districts.
- Low neighborhood crime rates.
- Growing job markets.
- Amenities such as malls, parks, restaurants, etc.
2. Decrease Personal Debt
Some experienced investors may carry debt as part of their investment portfolio, but the average person should try to avoid it. If you have anything from student loans, to unpaid medical bills, or even children starting college soon, getting into rental property may not be the move for you at the time.
This is not to say that you can’t do it, we just warn you to approach with caution. Don’t put yourself in a position where you lack money to make your payments on debt. We recommend always having a cash cushion and a margin of safety.
3. Secure Your Down Payment
Investing in rental properties typically requires a larger down payment than a traditional down payment. You will need at least a 25% down payment. To discuss additional options, give Mid America Mortgage a call.
The Bottom Line
When it comes to getting into rental property, try to keep your expectations realistic. Like any investment, rental property could take some time to turn a profit on and picking the wrong property could turn into a money drain. To discuss things in greater detail, contact Mid America Mortgage!