Investing in real estate rental can be an incredible opportunity for entrepreneurs. Residential renting has become one of the most popular investments for young, emerging investors. Well-kept, affordable housing will always be in high demand, so those who choose to purchase and rent properties can expect a reliable source of income once they get their business up and running. The hardest part is purchasing your first property. There are many factors to consider when searching for your first real estate investment. The guide below includes a few tips to help you get started.
Choose a Great Location
When searching for their next home, people will try to find a rental that fits the needs of their lifestyle. You can use this information to guide your purchasing decisions. Once you find a property you like, research the surrounding area. Make note of the biggest positive points, such as walkability, access to shopping centers, school zones and proximity to major highways. Also, keep in mind the safety rating of your property’s neighborhood and surrounding areas. You can use this information as selling points for buyers.
Secure Funding for Home Improvements
When you purchase your first rental property, chances are the home will need some repairs. It is your job as the investor to fund these repairs. This means you will have to secure working capital to fund your projects. There are several ways to do this. Some of the most popular options include conventional bank loans and fix-and-flip loans. These are usually provided by your primary financial institution and are dependent on your personal credit score. Once you have chosen a property, create a business plan to present to your bank. Having your investment plans laid out can help you secure a larger amount of money.
Determine Your Rent Pricing
Once you have purchased and repaired your rental, the next step is to set rent prices. The first thing you should do is research the average amount that people pay for rent in the area surrounding your property. Be sure to compare prices that most closely match the size and condition of your property. For instance, if you own a three-bedroom home, you should look at rent prices for other three-bedroom homes in the area. Then, decide how your tenants will be expected to pay for utilities such as water, gas and electricity. You can choose to have the cost of these services included in the monthly rent, or they could be separate charges.
Residential renting can seem like an overwhelming investment, but it is not impossible. With proper research and planning, purchasing your first property can be a success!