The idea of investing in real estate is not a new one. People have been running businesses based on real estate investment for many years, and this will continue to be a lucrative field for many. However, simply saying that you are going to invest in ‘real estate’ is a bit vague, as this is a huge market with many different avenues to explore.
One popular avenue is investing in rentals. The idea is very simple, and quite attractive – you buy a property and rent it out to others. The renters essentially pay your mortgage, and hopefully provide you a bit of profit on top of that. Sounds good, right? It can work out beautifully, but there are some things to know before you jump in with both feet.
Plenty of Research Required
Not every investment opportunity is going to be a good one. You need to do plenty of research before committing to a property, and you need to make sure that the numbers add up properly. For example, if the average rent for the type of property you may purchase is not enough to justify the purchase price, it would be best to pass. Only when an opportunity pops up that works out on paper should you consider taking action.
Ongoing Expenses
Remember, as the person who owns the property, you’ll be responsible for repairs and renovations that may be needed along the way. You will have to keep the property up to code, of course, and you will also need to make it a desirable place for a rental to call home. Part of your budget for this venture should be set aside to deal with repairs and maintenance that come up along the way.
Consider Getting Help
Perhaps one of the best steps you can take when getting into the rental game is to work with a property management company. By bringing this type of company on board, they can handle the day to day tasks associated with being a landlord, freeing up your time to do other things. Consider the cost of this type of service when making your plans.
Lastly, you will need to be able to secure financing in order to purchase a rental property. In the case of a multi-unit building, you’ll be looking for multifamily financing. Working with a lender who specializes in these kinds of loans is a good first step.