It can be a fun experience to purchase your first Elkins single-family rental property. But as with several investments, there are certain risks involved. Before you buy, there are several factors to consider to make sure that your first investment property purchase in Elkins becomes as fruitful as you hope it will be. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property will you give attention to? How will you finance your purchase? In what follows, we’ll talk about these questions and other important things you’ll need to know to make owning your first rental property a rewarding experience.
Define Your End Goal
When acquiring your first single-family rental home, one of the crucial aspects to remember is to set clearly defined end goals. Before commencing your property search, you should put in the effort to figure out what qualities you are searching for in your investment property. For instance, you might want to find properties in a particular area with a specific number of bedrooms or minimum square footage. You can also target a specific renter demographic, like college students or retirees. If you know the specifics, you can refine your search criteria and locate potential properties faster.
Prepare Your Finances
Aside from identifying what qualities you are looking for in a property, it is best to prepare financially before acquiring an investment property. Industry experts recommend paying down personal debt and saving for a down payment before starting your property search. Reduced personal debt can help you to qualify for better loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Setting up finance in advance is another vital step, but beware of high-interest loans or mortgage products that seem too good to be true. By prequalifying with a reputable mortgage lender, you will be ready to take advantage of investment opportunities as they come up. By prioritizing financial readiness, you can purchase that rental property with more confidence when the time is right.
Crunch the Numbers
After taking these important preliminary steps, it is time to start searching for the right property. During your search, it is essential to remember that you should run a series of numbers on each possible property, such as your margins, operating expenses, and expected return. This is where a lot of new investors commit big mistakes.
For new investors, it is crucial to keep in mind to include all the expenses related to purchasing and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin of 10% and a 6% return in your first year means you have a profitable investment.
Stay Objective
It is important to remember that an investment property is just that, an investment. Getting attached to a particular property or allowing emotions to guide your decisions is not a good idea. Also, the property you buy is not necessarily one you would ever live in yourself. Industry experts recommend choosing low-cost properties in high-demand areas for your first investment. But avoid fixer-uppers unless you are a highly skilled home remodeling expert or know a quality contractor who will do the work for less than the going rate. Your first single-family rental property should be viewed as the first step toward a long and profitable investment career rather than the end goal. In this way, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
Lastly, keep in mind that purchasing a rental property is just the first step. You need a proactive management strategy to guarantee that your investment succeeds. This is why it can be helpful to hire an Elkins property management company. As local market experts, property managers can help you find off-market investment properties, analyze market conditions, set rental rates, and much more. As more veteran investors will tell you, the appropriate property management company is an invaluable partner in money-making rental property investing.
If you’ve identified the ideal investment property, make sure you work with the best Elkins property management team. Contact Real Property Management First Choice at 479-242-0791 now.
Originally Published on March 13, 2020
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