Thinking about taking the plunge into real estate investing? If you are, you should know that investment properties can be a low-stress and lucrative way to supplement your income. At the same time, your first investment can also come with quite a few headaches and guesswork — that is, unless you know which questions to ask yourself before investing. Alterra Realty Group has pulled together this list of top questions and resources.
How will you finance an investment property?
Keep in mind that securing a loan for a rental property requires more steps and stiffer criteria, so make sure your financial records and your credit score are both in good shape. You will also need to have a down payment saved. Since rental home loans can be more expensive, you should also shop around for the best terms and interest rates. You may even be able to find an option with a lower down payment.
Are there additional costs you should consider?
Aside from the down payment and home price, you should also be aware of some additional costs that can come with purchasing a rental property. Depending on the market and where you are buying, for example, it’s possible that you will need to cover expenses related to closing.
It’s also likely that you will need to put some money into repairs and improvements before you rent the property. This includes any needed appliance repairs, which can be a cost-effective alternative to buying brand-new ones. To find appliance repair professionals in your area, a resource like Angi makes it easier to vet reviews and get a clear idea of what repairs will cost you. You may even find local providers offering credits and promos. Take the time to examine your options.
What are local renters looking for in a home?
Tenants will certainly be looking for working appliances, but they’ll also want other rental features. Most of these have less to do with what’s in the home than the area surrounding it, so you will want to focus your efforts on finding a neighborhood that is safe and offers convenience.
If you plan on renting your property out to vacationers and travelers, the list of desirable features and amenities looks quite different. You should still select a home in a safe neighborhood near local attractions. However, you will also want to add little touches like a smart lock system and pet-friendly furnishings, for instance.
Will you self-manage or hire a property manager?
Finding the right home and getting it fixed up is a snap compared to trying to manage your first investment property. You may be considering self-managing the property in order to cut costs, but you really need to know what you could be getting into before deciding.
For one, managing a single rental property can be a full-time job. You will need to single-handedly market the home, vet tenants, collect rent, arrange repairs, and deal with any complaints or issues that arise. If this sounds like too much hassle or work, you can always hire an experienced company like Alterra Realty & Management.
What tax deductions are available to landlords?
Now that you know investment properties come with additional expenses, you may be rethinking your plans. Before you walk away, though, you should know that many of these additional costs are deductible! You may need to foot the bill upfront, but you may just get paid back.
One such credit? The fees you pay to property rental companies. That’s right — in addition to saving yourself time and stress, hiring a management company can come with tax savings. You can also take deductions for repairs, marketing, legal fees, utilities, and more.
Finding, buying, and preparing an investment property may take a lot of hard work, but this venture can also be highly profitable. You just need to find a home with features/amenities renters are looking for, as well as figure out a budget and financing options. From there, hiring a property manager will make finding tenants and managing the home a snap! Contact Alterra Realty Group today.
Written by Katie Conroy [email protected]
Photo Credit: Pexels
