If you’ve researched investment in any capacity in the last decade, you know that passive income is the dream. How could it not? It’s one of the only ways you can earn money when you’re not working.
Real estate investments aren’t exactly passive income but they are a step in that direction. Investing in rental houses is a dream in other ways, though. Real estate is well-known for being one of the you can make.
Whether you’re looking to diversify your investment portfolio or just want to secure a property to lock in a rate, knowing how to invest in rental property will help you begin your journey as a real estate investor.
Keep reading to learn how to find the best property to invest in at the best possible rates!
Think About If Being A Landlord Is Right For You
As we said above, owning a rental property isn’t quite the same as earning passive income. Owning a property as an investment opportunity does involve some work. Before you can learn how to invest in rental property, you should first decide if you should.
Learning how to buy rental houses is a business, much like any business. If you’re serious about collecting on your investment you’ll need to make sure you’ll be able to offer quality service for your tenants.
Before you decide to get into the rental property industry you should do some soul searching. Think about if you’re planning on doing the maintenance work yourself or if you’ll be outsourcing that work. If you’re going to be hiring people to do repairs, think about if you have the kinds of connections you’ll need.
You’ll also want to think about your availability. If you work a 9-to-5 job, you’ll have to think about how your tenants will be able to reach you during those hours.
As with any business, you might have to spend some money to make money. You may need to pay for some help to help make sure your rental properties are running smoothly and your tenants are taken care of.
Reduce Personal Debt
Remember, securing a rental property as an investment opportunity is still an investment. Yes, it will bring in income every month. You’ll still have to pay some sort of expenses, though, even if not every month.
Before you begin to look into ways to buy a rental property in earnest, you should start off by reducing your current debt as much as you can. You’ll want to make sure any existing student loans or mortgages you might have are in good standing, so you’re sure to be able to keep up with your rental property payments.
This can also help you get the best deal on a loan, which will help you get the best rate of return on rental housing.
Save Up For The Down Payment
Once your other debts are in good standing and you’ve decided you want to be a landlord, you’re ready to begin seeking a rental property in earnest. You’ll need to make sure you’re ready for when the right opportunity arises, though. This means having your down payment together and ready to go.
Most financial analysts recommend having a down payment of at least 20% for a rental property. This is because investment properties tend to have stricter requirements for loan approvals. Mortgage insurance isn’t available for investment properties, either.
You might be able to qualify for a personal loan to help you get your down payment together, however.
Find The Right Property
Now that you’ve got your finances together, you’re ready to begin property hunting in earnest. This is the most important step, once you’ve got your finances in order. You know the three rules of real estate investment after all.
Location, location, location.
Finding the best property to invest in requires more than just finding an appealing location at an attractive location, though. You’ll also need to become familiar with the area where you’re planning on buying, as well. You’ll be at least somewhat familiar with the market in the area so you can recognize a good deal when you find one.
It will also give you some idea about how in-demand that area is. Some market research will reveal an up-and-coming area. This will help ensure your investment property as the property values will continue to rise as more and more people move in.
Scouting around for the right property will also help you answer questions about zoning. Residential properties aren’t the only ways to buy rental property, after all. You might decide to buy a storefront as a rental property, for instance.
Once you’ve found an appealing property, you’ll want to investigate further. First, contact the selling agent and get a quote if one isn’t listed publicly. Make sure to check the factual data like the size and condition of the property, as well.
Once you have that data, you’ll want to conduct your own research as well. You’ll want to conduct your surveying if you’re planning on subdividing land in any capacity. If the surveying results don’t match up with the data included with the quoted price, you can use that discrepancy to negotiate for a better deal.
There’s a reason investing in rental houses is so popular. It’s one of the few assets in life that rarely depreciates in value.
If you take the time to set things up right, you can reach that dream of passive income. You’ll even be earning when you’re sleeping!
What To Do After Learning How To Invest In Rental Property?
Learning how to invest in rental property is just one of the many investment opportunities at our disposal in the 21st Century. If you’re looking for more innovative ways to make money, browse the rest of our business articles today!