The key to successful rental property investing is locating and purchasing the best rental properties that will generate consistent income.
You will probably begin by searching for rental properties on your own, but you may want to enlist the help of a real estate broker who specializes in investment rental properties. Often, brokers will learn of properties as soon as they are put on the market and give you notice before the news is widespread. Brokers may also know the neighborhoods and have useful information about taxes, expected rental rates and more.
Even before you start looking at investment rental properties, you need to have clear knowledge of your finances and have all of your assets and debts in order. Know your credit score, and check your credit report with all three credit agencies for any possible inaccuracies that could get in the way of you being approved for a mortgage. Also, how much you can afford to spend.
Do thorough research on the local real estate market. Doing this can help you ensure that you make a purchase and pay the right price; this will help provide a profit margin large enough to handle any occasional vacancies and still leave you with a profit.
Fixer-upper types of houses present their own particular advantages and disadvantages. The advantage is that the initial investment price can be far lower because of the repairs required. The disadvantage is that a house in disrepair can quickly become a money pit when unseen problems arise. Unless you have contracting and construction skills, it is often best to purchase an investment rental property that is less likely to need extensive renovation.
All investment property should be fully inspected before you make a purchase. Hire a professional to ensure that all electrical and plumbing installations meet the codes, that there are no hazards such as lead paint, and that there are no structural issues that could be unsafe or require potentially costly repairs. A complete home inspection can save thousands of dollars in surprise repair bills and is an expense that you should consider worthy.
Also, before investing, do some research regarding the neighborhood. Not only do you need to know what the rental market is like, it is helpful to know the crime rate so that you can provide proper security for your property and tenants. If rents are on a rising trend, you could be about to make a very wise investment. Conversely, if rents are dropping in the neighborhood, there may be some developments that are causing residents to relocate. Purchasing in an area that has a growing demand can get you higher rents and more income from the property.
Above all, do not rush into investment rental property. Failing to do the proper research and “legwork” ahead of time can result in a poor investment that will lose money. Remember to keep your eye on the prize and have patience to complete all necessary steps of the process and you will have a higher profit margin on your investment. For assistance, contact a Michigan property management company.