Buying Property For Investment Purposes | Buying Rental Property

Buying rental property

Buying property for investment purposes can be difficult if you’re just getting started in the real estate industry. Regardless which area you live in or plan to invest your money; real estate is one of the better investments a person could make. The reason being is because property will always appreciate no matter the area you purchase the home. Many other assets out there will depreciate following the purchase. Did you know that as soon as you buy a car, you lose ten percent of its value as soon as you drive the car off the lot? Money may also be a depreciating asset; due to inflation, that dollar you may have today will not be worth the same in a few years. As a home buying company, we believe that buying rental property for investment purposes can be the best asset you may own in your investment portfolio – we’ll tell you why & a few tips to help ensure purchasing property will be a profitable decision. First, you need to choose your location; this is a massive part of buying an investment property. Not only do you need to decide the site, but you need to know how to decide the right tenants and how to screen those tenants properly, so there’s no issues. Deciding the correct price to purchase a property at is an enormous factor as well. You’re going to need to ensure you do not overpay when buying rental properties. There are plenty of factors that go into this large decision. It is never a good idea to be an impulse buyer. Sixty-one percent of people in the United States of America are impulse buyers, more than half of our population. Companies know this about consumers; this is why everywhere you go you see an ad persuading you to purchase something, it’s present in your email, on your television, throughout the internet and multiple videos, simply everywhere you look. Why not buy something that will generate you income? Let us guide you on the right path to financial freedom.

Location when buying rental property for investment purposes

Location is a huge factor in deciding when you purchase a rental property. One reason you need to determine is if you want something close to your primary residence or not. This is not a requirement to live near your rental property, but it provides to be extremely convenient. There are plenty of landlords who live across the country and rent out homes. Being close to it might make sense if you fear the property will run into numerous issue, unless you hire a property manager. We only recommend hiring a property manager if you have more than ten properties or cannot find the time to manage the properties yourself. When deciding a location, you want to find an area with low taxes and decent rental rates. Suppose you pay two thousand or more in taxes but receive less than one thousand in rent a month. You can see why these circumstances will not be beneficial to you. The lower the taxes, the higher the rent leaves you in a great position to profit more from your rental property. Make it a desirable location for your tenants, such as you don’t want your property to be extremely far from transportation methods or shopping stores and businesses. That will not make for a desirable tenant. Better location, happier tenant and easier to keep your rental property occupied. Always find out if the area you’re looking into buying rental property has a large rental to homeowner area. Which is something you can always ask any agent that you’re working with. If you are in a high rental area amongst other rental properties, you know you’ve chosen a good location.

Screening your tenant

The most important thing about buying property for investment purposes is that you need to screen your tenants properly. If you rent your property to the wrong person, who may not be qualified, it could raise future issues. Always ask for credit report history, to see what amount of debt they may owe and to whom. Creditors look at credit history because eighty percent of the time it’ll represent how well this individual will pay their bills. If they have a few concerning issues on their credit report, speak with them about the issues. If they give you an honest answer, then you can possibly look past a few insufficient payments. Always make it a requirement to receive first, last, and security payment for your rental property. It will allow you to receive three months rent if things do not go well with the tenant. It will also qualify the tenant a little better. Working together with your tenant is always a massive part of buying property for investment purposes. Making for a two-way street will make the experience go much smoother.

Never overpay

Making sure you never overpay for a rental property is absolutely the number one issue most new landlords face. However, there is a simple rule that every investor follows in buying rental property. They follow a cap rate rule which means they want to purchase property at a specific cap rate — getting a certain amount of other investment money back each month. For example, if you buy something for $100,000 and get $1,000 in rent each month for the property, you get 1% of your money back each month. You can quickly figure this simple rule out by dividing your net monthly rent by your purchase price. Most of the world’s best property investors will stay at an 8% to 10% cap rate. If you can find a rental providing that sort of money back on the investment; we highly recommend you buy that home today.

Everyone wants to be rich quick

Everyone would love to be rich. We work hard every single day to make as much money as possible. What matters is exactly what we do with that money. Suppose you would like to treat yourself and buy that fancy car. Maybe you are conservative and keep all your money in savings and prefer not to spend. If we decide to invest that money, we all want to ensure we do it correctly. If you end up buying a home, make sure you do it the right way. Please do your research, speak with a few professionals to see what they can tell you. Reach out to a local agent, they can always help guide you when it comes to buying property. Rental income can be considered passive income money that comes in like clockwork. The more you own, the more you can make. It may even help some retire at an earlier age than expected. We all want financial freedom, and holding a rental property may be the answer for most people. When you get up there in age and are ready to retire, you can liquidate every property and retire on a beach somewhere! (Buying Rental Property For Investment Purposes)

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