When looking at the world and its opportunities for
individuals to become very wealthy, purchasing real estate property is
definitely at the top of the list. Right here in Columbus, there are many excellent
chances to buy property, with the intention of renting it out and profiting.
But, just like any investment, it is of benefit to know exactly what you're
doing before you dive in headfirst. This is not like stock market, where you
can choose to play around with just a few dollars: the first time you buy
property, it will probably be in the six-figure ballpark. Here are some
objectives to take a close look at, and to think about while planning your
future and buying investments.
Make sure it's up your alley. Do you happen to be handy with tools,
good at repairing drywall, or even the duty of unclogging a toilet? You can
always call a helping hand for these issues, but when it comes to your very
first investment property, it may be you who gets the call to come lend a hand.
Your first property may take a substantial amount of time for you to learn the
ropes during, and see how the business itself ebbs and flows.
Consider going into this venture debt-free! Some who are seriously considering
adding rental properties to their holdings are carrying debt, but the everyday
investor should probably attempt this venture without. If there are items
weighing you down such as medical bills, student loans, or college, this simply
may not be the best time to secure a rental property. You never know when you
may have a hot water heater go out, or a faulty furnace ruins your month.
Consider the down-payment amount: Investment properties really can
become quite an asset for you, especially when you have steady tenants, things
are going great, and everyone is paying on time. As far as the down payment Is
concerned, the 3-5% that you put down on a home is going to be quite a bit less
than what is required for an investment property. Mortgage insurance types vary
greatly on rental properties, and you may need to come up with at least 20%
down.
Pay attention to the Interest Rates: In the residential purchase market,
interest rates have been pretty low lately, but when it's known to be an
investment property, they can tend to be higher. When you are calculating your
future, you just need a mortgage payment that is low enough so it doesn't begin
to eat into the profits that you were anticipating by buying the property in
the first place. In many areas of the nation such as Denver there has been an
intense boom lately, where you may have to “buy high” to score a rental
property. Columbus remains stable, and while prices rose 9% last year, the time
is still excellent to buy.
Take care when it comes to a fixer-upper: It can be very tempting to seek out a
house that comes to you as the investor at a bargain price, and quickly attempt
to transform it into a rental. When it comes to your first investment property,
the truth of the matter is that you will then have to locate a contractor who
does work for a low price that speaks major volumes. The best home to be on the
hunt for in this scenario is one that only needs minor repairs, and is priced
slightly below the market average.
Make sure the location is right: if you do find a home priced a bit
below market, making sure that it is close to parks, restaurants, malls, and
other amenities will boost it's rentability quite a bit. Also trying to make
sure that the job market is stable is important as well, an angle that Columbus
definitely has covered.
What the big picture entails: While looking for a suitable rental
property, you should keep in mind that the gigantic monthly payoff may not come
for just a little while, and if you happen to purchase the wrong property, it
could really spell disaster for you. Working with an experienced sidekick
through this endeavor will help greatly, and protect you from a large-scale
failure. Attempting to rent out your own house before embarking on the process
of qualifying for the loan, learning the ropes of the profession, and dealing
with urgent repairs is one good way to gradually build your experience in this
viable, and hopefully profitable venture!
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