A Guide to Selecting the First Rental Property
If you want to build personal wealth over time, the best thing you can do is to become a landlord. The matter of fact is that buying a rental property can actually be a starting point in your real estate career. It can also serve as a backup plan in case your other real estate deals fail to offer you much profitability. In general, the success or failure in rental property investment can help you make a decision about your future real estate endeavors.
The very first thing you will have to do is to determine your parameters. You will have to know the specific requirements of tenants you want to fulfill. For instance, you can purchase a property near a college or a supermarket. Then you will also have to determine the type of property you can purchase. In most of the cases, people start with single-family homes because they are easy to manage and there are a lot of benefits which single-family homes can provide to the investors. However, you can also go for duplex properties if you think you have better management capability. Going further beyond this level is not recommended if you are a first-time investor.
Another thing you will have to keep in your mind is the budget. While you may believe that spending money can help you gain bigger profits, you can also get reasonable profit generated with small investment. You will just have to be good at managing your business well.
Build a list of properties
After you have the understanding about type of property you want, now you will have to build list of properties that fit the merits. Look into the neighborhood and other localities close to you in order to find the properties you can purchase. You can also run online search to find the properties. As a matter of fact, online searching can save huge amount of time as you will be able to compare prices in the better way.
Narrow down the list
While the list you have could be quite a lengthy one, you will not be able to find every property as the best option. There are going to be only a few properties which you can actually consider. Therefore, look at your parameters again and start doing the comparison. You will soon be able to find out that there are a lot of properties which you just cannot buy. In the end, you will have a narrowed down list containing only a few properties which actually fit in the merits you have set.
No matter how much personal cash you have in hand, you will not like to spend all of it while buying a property. The reason is that you will require huge amount of cash for the property management after the purchase. In this scenario, you will need to work on arranging financing options. You can get the bank loan but it is going to hurt you due to the interest rate and other restrictions. Therefore, the best thing you can get is to ask for the private loans.