3 Tips for Purchasing Your First Rental Property

First Rental Property

If you ask any business-minded person what a good investment is – or, in fact, anyone at all – real estate is probably the answer they would give. Some might mention gold or bitcoin or stocks, but it’s real estate that is the kind of investment that won’t just give you a big payoff when you sell your portfolio but will provide you with a good income all the time you’re holding onto it. This is not something that can be said for many other investment types, and it’s why real estate is considered to be such a great choice.  

The best way to make money when it comes to investing in property is to buy at a good price and then rent out the apartment or house and gain an income from the tenant’s rent. However, if you’re going to do this, you’ll need to choose the property well in the first instance; a lot will be riding on the choice you make at the start. Here are some tips to help you when you need to choose the right property. There are a number of elements to consider.  

Make Sure The Property Is The Right One For You

There are many different directions you can go in once you decide that you are going to be a landlord. One option is to manage the property yourself. This means that if something goes wrong, you’re the one who has to deal with it (and in some cases, you’re the one who has to do the work to fix the issue too). You’re the first point of contact if the tenant has a question or needs help.  

For some, this is the best way to work as it means they can truly be involved in their property and establish a good relationship with the tenant. However, if this is the route you choose to go down, the property needs to be something you can deal with. If you have basic DIY skills, choosing a new property will make more sense than an older one in which more can go wrong, even if it’s cheaper. Plus, you’re going to need to choose a property close to where you live if you’re going to have to visit once in a while. 

 If it makes more financial sense to buy a property further away, or you haven’t got many DIY skills, then hiring a manager for your property could work out better. You’ll be less involved, and that can sometimes be a good thing.  

Pay Down Your Debt First 

Buying a property to rent out might make a good deal of financial sense, but if you already have debt, it will not be easy to get the mortgage you need to make that business idea into a reality. If you can get a mortgage, the interest rate might be a high one as the lender needs to have some security in place just in case there is a problem.  

Although you might be excited to start your real estate business, it’s better to pay off your debt first and then focus on buying the right property. In this way, you’ll have a lot more choice, and you won’t be burdening yourself with even more debt. Remember, there will be times when your property is empty, and you’ll need to pay the mortgage without any rent coming in. The less debt you have, the easier this will be.  

Speaking of money, when you buy a rental property, it’s usual to need a larger down payment than if you were buying one to live in. Make sure you have the money to hand as this can be a big stumbling block if you’re not aware of the differences in what is required.  

Don’t Buy A Fixer-Upper 

Surely buying a fixer-upper is a great idea? It’s cheap and you can, with a little work, turn it into something worth much more than you bought it for. Therefore, when you eventually come to liquidate your property portfolio, you’ll make a hefty profit. It sounds like exactly the right thing to do. 

 In reality, it’s not a good idea. These properties can cost a lot more to improve than you realize, and when you’re just starting your property business, any money you have to pay out will need to be strictly accounted for. Later on in the journey, once you have some more experience and additional properties to use as leverage, a fixer-upper can be ideal, but right at the start, it’s far better to buy something that needs to work or, if possible, something brand new like the apartments in the Golden Mile complex. People will be more willing to pay a higher rent to live there, and you won’t have to make any expensive repairs right at the start. 

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