Purchasing your first Flushing single-family rental property can be a thrilling experience. However, like with all investments, there are particular risks involved. To guarantee that your first investment property purchase in Flushing becomes as successful as you hope it will be, there are some matters to consider before you purchase. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property will you concentrate on? How will you finance your purchase? In what follows, we’ll address these inquiries and review important details to make purchasing your first rental property a rewarding experience.
Define Your End Goal
When buying your first single-family rental home, one of the first steps to take is to set clearly defined end goals. Before you begin your property search, you should invest some time to determine what qualities you are searching for in your investment property. For instance, you may be seeking properties in a particular area with a specific number of bedrooms or minimum square footage. You can even target a certain group of renter demographic, like college students or retirees. Understanding the details allows you to refine your search criteria and locate potential properties faster.
Prepare Your Finances
Aside from figuring out what qualities you want in a property, it is critical to prepare financially before purchasing an investment property. Industry experts recommend paying down personal debt and saving for a down payment before beginning your property search. Reduced personal debt can help you to qualify for more beneficial loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Setting up finance in advance is another critical step, but be wary of high-interest loans or mortgage products that seem too good to be true. By prequalifying with a reliable mortgage lender, you will be prepared to seize the investment opportunities as they arrive. By prioritizing financial readiness, you can acquire that rental property with more confidence when the moment comes.
Crunch the Numbers
After taking these important preliminary steps, the search for the ideal property begins. One critical factor to consider during your search is that you need to run a series of numbers on each potential property, incorporating your margins, operating expenses, and expected return. This is where a lot of new investors make serious mistakes.
New investors need 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.
It is critical to keep in mind that an investment property is just that, an investment. Getting attached to a certain property or allowing emotions to dictate your actions is not advisable. In addition, the property you buy is not necessarily one you would ever live in yourself. Industry experts suggest selecting low-cost properties in high-demand areas for your first investment. But keep away from fixer-uppers unless you are a highly skilled home remodeling expert or know a great contractor that can perform the work for less than the going rate. Your first single-family rental property should be regarded as the first step toward a long and profitable investment career rather than the end goal. In this manner, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
Lastly, keep in mind that buying a rental property is just the first step. To confirm your investment pays off, you need a proactive management strategy. This is when a Flushing property management company might come in handy. 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 experienced investors will tell you, the correct property management company is a vital partner in lucrative rental property investing.
Originally Published on March 13, 2020
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