Buying an Investment Property? Here’s What You Need to Know

If you are considering investing in real estate to rent out long-term or as an Airbnb, congratulations! It is indeed an excellent idea that can bring you a good source of income. But before you start looking for properties, ask yourself if you’re ready to become a landlord.

Are You Ready to Purchase an Investment Property?

 You want to make sure that you’re ready for what buying an investment property entails. Here are two of the things every investment property owner should have:

Financial Stability

Investment properties require a significantly higher stability level compared to primary homes, especially if you intend to rent them out. Many mortgage lenders require borrowers at least a 15% down payment for investment properties. Additionally, you’ll also have to have the property professionally cleared by inspectors. Needless to say, you need to prove that you have enough money to cover the initial costs of buying a house, including the down payment, inspection costs, closing costs, and any maintenance or repairs needed.

Time to Manage Your Investment Property

An investment property requires proper management to deliver the income you want. You need to create advertisements for your rental property, screen potential tenants, ensure their payment on time, perform regular maintenance, and be ready for any repairs needed. If you think you won’t be able to handle these responsibilities as an investment property owner, you should seriously consider hiring a property manager to take care of them all for you.

What to Consider Before Purchasing an Investment Property

Before you start shopping for a place to rent out, there are several factors that you should bear in mind to ensure that you’re making a good investment.

Housing Market Trends and Location

First, you need to know that not all cities are great for renting out your property. Based on the number of available houses, housing market conditions, and the number of people in the area, you should make a choice on what city is the best for you. For example, if you’re planning to rent out your property for at least 3 years, you should consider buying a house or condo in an area that has a growing population. That way, you’re more likely to find people who are willing to rent your place out.

Buying with a Partner

Also, if you’re planning to buy with one or more partners, make sure that you’re on the same page with regard to how you want to rent the property out. Do you want to put up a single advertisement for the entire property and share the income, or do you want to list the place separately and rent it out to different tenants? Do you want to advertise it as one unit or would it be better to list it as individual spaces?

Property Taxes

 It is also important to remember that property taxes in the United States aren’t the same everywhere. Depending on where you buy your property, you might have higher or lower taxes than in other states.  As an example, if you buy your property in a community where property values are low and the overall tax rates are low, you’re likely to have a lower property tax rate than in high-priced communities. Some states also have a property tax rate that varies depending on the area. Also, you should keep in mind that property taxes usually increase over time. So if you’re planning to rent out your investment property for a long time, you should look for a community with a relatively low property tax rate.

Mortgages by Misty is Here For You

If you feel prepared, then now is the time to purchase your investment property. Remember these things when investing in real estate:Find the right property. Make sure that you’re getting a property worth your money. Limit yourself to one or two potential properties and be sure that you can afford them before signing any papers.

Research different  home purchase loan options and consider the possible interest rates, points, and closing costs. Prepare for future expenses. Calculate the amount of money you’re going to need for the initial costs, maintenance, and other expenses that might arise during your ownership. When you’re ready to buy an investment property, get the help of trusted Tempe home loan expert, Misty Garrison from Mortgages by Misty. Let us help you determine the right loan solutions for your specific needs. Get in touch with our team today to schedule a meeting!