When looking at the world and its opportunities for individuals to become very wealthy, purchasing real estate property is definitely at the top of the list. Right here in Columbus, there are many excellent chances to buy property, with the intention of renting it out and profiting. But, just like any investment, it is of benefit to know exactly what you’re doing before you dive in headfirst. This is not like stock market, where you can choose to play around with just a few dollars: the first time you buy property, it will probably be in the six-figure ballpark. Here are some objectives to take a close look at, and to think about while planning your future and buying investments.
Make sure it’s up your alley. Do you happen to be handy with tools, good at repairing drywall, or even the duty of unclogging a toilet? You can always call a helping hand for these issues, but when it comes to your very first investment property, it may be you who gets the call to come lend a hand. Your first property may take a substantial amount of time for you to learn the ropes during, and see how the business itself ebbs and flows.
Consider going into this venture debt-free! Some who are seriously considering adding rental properties to their holdings are carrying debt, but the everyday investor should probably attempt this venture without. If there are items weighing you down such as medical bills, student loans, or college, this simply may not be the best time to secure a rental property. You never know when you may have a hot water heater go out, or a faulty furnace ruins your month.
Consider the down-payment amount: Investment properties really can become quite an asset for you, especially when you have steady tenants, things are going great, and everyone is paying on time. As far as the down payment Is concerned, the 3-5% that you put down on a home is going to be quite a bit less than what is required for an investment property. Mortgage insurance types vary greatly on rental properties, and you may need to come up with at least 20% down.
Pay attention to the Interest Rates: In the residential purchase market, interest rates have been pretty low lately, but when it’s known to be an investment property, they can tend to be higher. When you are calculating your future, you just need a mortgage payment that is low enough so it doesn’t begin to eat into the profits that you were anticipating by buying the property in the first place. In many areas of the nation such as Denver there has been an intense boom lately, where you may have to “buy high” to score a rental property. Columbus remains stable, and while prices rose 9% last year, the time is still excellent to buy.
Take care when it comes to a fixer-upper: It can be very tempting to seek out a house that comes to you as the investor at a bargain price, and quickly attempt to transform it into a rental. When it comes to your first investment property, the truth of the matter is that you will then have to locate a contractor who does work for a low price that speaks major volumes. The best home to be on the hunt for in this scenario is one that only needs minor repairs, and is priced slightly below the market average.
Make sure the location is right: if you do find a home priced a bit below market, making sure that it is close to parks, restaurants, malls, and other amenities will boost it’s rentability quite a bit. Also trying to make sure that the job market is stable is important as well, an angle that Columbus definitely has covered.
What the big picture entails: While looking for a suitable rental property, you should keep in mind that the gigantic monthly payoff may not come for just a little while, and if you happen to purchase the wrong property, it could really spell disaster for you. Working with an experienced sidekick through this endeavor will help greatly, and protect you from a large-scale failure. Attempting to rent out your own house before embarking on the process of qualifying for the loan, learning the ropes of the profession, and dealing with urgent repairs is one good way to gradually build your experience in this viable, and hopefully profitable venture!