How to Buy Your First Income Property
For many people, making money from rental properties in an ideal way to save for retirement, gain extra income each month, or go on exotic vacations every year. To get started, you must buy an income property, and there are more steps than you might think. Here are some tips on how to get started in your new career as a landlord:
- Define your goals: Why do you want to own a rental property? How much income are you looking for each month? Each year? Are you going to purchase just one, or do you want to accumulate wealth by having several properties? The answers to these questions will help you plan for the future.
- Partner with a qualified realtor: Realtors know real estate, but some specialize in certain areas, like investment properties. Choose a professional who understands the dynamics of buying real estate for income purposes. A realtor will also be able to advise you on the best areas to look into. They also have access to foreclosures that you can purchase for a lower price, saving you even more money.
- Network with other landlords: You may not have your first income property yet, but find some other landlords to network with. Join local groups or look online. Most would be happy to share their experiences and give you tips on what type of property to look for, and which ones to stay away from.
- Understand the landlord/tenant laws: If you’re going to be successful as a landlord, you need to understand the landlord and tenant laws. This is important because when buying your first property, you’ll need to choose the right tenants and know what you can and can’t do to the property.
- Consider a property management company: Regardless of how many properties you own, having a management company to help with maintenance and tenant issues can be an invaluable resource. From dealing with emergencies, such as a broken furnace, to collecting rent checks every month, a third party company can leave you free to do other things.
- Hire a bookkeeper/accountant: Unless you are very good with numbers, it’s best to hire a bookkeeper to keep track of all income and expenses for the property you own. This will make things much easier come tax time, especially if you are audited.
- Partner with an experienced lender: Chances are, you don’t have a lump sum of cash sitting in the bank to pay for a property outright; it’s important to choose a lender that understands the dynamics of purchasing rental properties. The lending rules are stricter than if you were buying for your own use; and you will likely need a bigger down payment. You don’t want a deal to fall through because your lender didn’t understand what was involved. Make sure your lender is aware of your intentions when purchasing a property.
Once you’ve purchased your first property and have found a tenant, you can reassess your goals and decide whether to purchase another one. Soon, new investors will be coming to you for advice!
Benefit National is a full-service property management company that can help you with all of your property management needs. Visit the website today for more information.