If this is the year you will become a landlord, there are some things to know and consider when choosing the right property for your needs. When investing in rental property it is wise to focus on all of the small details, not just the rent checks you anticipate cashing.
Is the timing right?
The real estate market in the Northeast is ripe with opportunity. Interest rates are still low, rental properties are in demand, and many communities are growing in population. We are also seeing a rise in new construction in both the residential and business sectors. This means that it may very well be the right time for you to invest in a rental property. Before you buy, you should have a firm idea of your objectives and your plan, and also have met these criteria:
Be on firm financial ground. This investment should not impact your ability to pay your own mortgage or your monthly bills.
Know what your primary goal is, and have a clear idea how it can be achieved. Perhaps you want to find a vacation property that you rent out during off-seasons and have for personal use for part of the year, or maybe you’d like to invest in a two-family home and rent year-round to tenants. Fine-tune your plan and narrow down your choices.
Be realistic about your skill level in managing this investment. In other words, if this is your first rental property, do not take on too much property or a fixer-upper if you lack the skills or capital to support it. By starting small, like buying a single apartment, condo or duplex, you can get started with investing in real estate but limit the demands it puts on you.
Choose a location where rentals are in demand. Is there a demand for rental property where you want to buy? Will you easily fill vacancies? Locations with growing employment opportunities tend to attract more people, and that equates to more tenants. To find out how an area rates, go to the S. Bureau of Labor Statistics or to your local library.
Decide on a reasonable location for ease in management. If you are planning on managing the property yourself, you probably will want it to be located close-by so it’s an easy trip if a repair is needed or if there is a tenant issue. You could also hire someone to oversee the needs of tenants and keep up the property if your budget allows. These factors should be considered when narrowing down property location choices.
Before you invest in a rental property, it is wise to know exactly what you hope to achieve from it and to take a close look at the costs and small details that could challenge your objectives. Take the time to create a well thought-out plan. If the time is right, your real estate agent will be able to offer experienced advice about which properties best suit your goals.