Tips for Buying & Managing Your First Investment Property

Tips for Buying & Managing Your First Investment Property

Written by Medina James

After a lot of thinking and soul-searching, you feel ready to purchase an investment property to enjoy an extra stream of income. Plus, it’s a chance to ultimately raise your net worth. Because this represents unfamiliar territory, Lake Life Realty hopes the following insights can help you make your investment a success.

Study Your Market

Never forget or underestimate the importance of knowledge in real estate investments. Research your local market to determine whether you should buy an investment property now or wait until conditions improve. HomeVestors points out that the current climate is ripe for the picking, so long as your finances are in order and you have proper guidance throughout the process.

Lake Life Realty specializes in buying and selling homes. If you’re ready to dive in, connecting with someone who knows the local market inside and out is the best way to ensure your success. Make a note of the price variations in local neighborhoods so that you have an idea of how much you should invest in a property and how much you should charge tenants.

Vital Safeguards

Do not find out the hard way how much you risk in your personal life when you purchase an investment property. By forming a limited liability company for your venture, you safeguard your assets and yourself from legal actions that future tenants, property management companies or others may take against you. And as Avail points out, you can purchase property through your LLC. Creating an LLC involves working with a lawyer, or you can use a formation service, which is inexpensive, quick and easy. You can also navigate the red tape yourself to save money.

Figure Out Financing

Just like with buying a house for yourself and your family, you may need financial help buying an investment property. Expect to drop at least 20% for a down payment, but you may reduce that percentage if you do not mind living in the investment property for a year before approaching lenders. If you anticipate difficulty in saving up a down payment that large, consider working with local real estate investors.

Tend to Repairs

According to RentPrep, you should tend to repairs and upkeep quickly once you secure your initial real estate investment property. You want to get your property rent-ready as soon as possible so that you may turn a profit sooner. Another reason to tend to repairs is to help boost the property's value.

Visualize Your Dream Tenant

What kind of tenant do you want living in your property? Think about income, rental history, credit, criminal background, employment and lifestyle. Once you have a dream tenant in mind, create a list of tenant requirements. While finalizing this list, do some legal research to ensure you don't accidentally discriminate against members of protected classes and communities.

Understand Investment Property Expenses

Make time to talk to experienced real estate investors and rental property owners. Specifically, ask about regular expenses you should anticipate and account for. Use the information to get a solid estimate of your monthly cash flow, your tax obligation and when you may expect to make money.

Secure Your Property

To keep your property safe from burglars and uninvited guests, consider adding security features like a smart security light or doorbell that your tenants can tap into, as well as a fence and other deterrents like thorny bushes, motion sensor lighting and even security cameras. Just bear in mind those cameras are for outside use only, and access should be shared with your tenants.

Secure Landlord Insurance

Much like you have homeowners insurance, it's a good idea to secure landlord insurance. Such coverage safeguards you from lost rental income, damage to the property and legal actions tenants or their visitors may take against you for injuries sustained on property grounds. Look into saving money by bundling multiple insurance policies with the same provider.

Learn How To Write Protective Rental Contracts

As a first-time investment property owner, you may not understand the elements of a solid rental agreement. Talk with legal professionals and experienced property owners to learn what belongs on rental contracts and how to protect your tenants and your investment. Study current landlord and tenant rights and obligations in your state.

With the right gameplan, you can have a satisfying experience with your first real estate investment property. Research properly and connect with professionals and services that can help you through the process. Soon you’ll enjoy that passive income you’re dreaming about!

Ready to dive in? Call Lake Life Realty today to get started! 603-569-HOME