If you have been considering buying an investment property or two, it’s important to understand the entire home buying process from the investment perspective. While owning multiple investment properties can help you generate a healthy income stream, there are several key considerations to think about before you buy an investment property. It’s also a good idea to speak with your real estate agent as well as your financial advisor to get the answers to any questions you may have before you begin the process of becoming a landlord.
1. Startup Capital
For a landlord, the startup capital needed to purchase an investment property includes initial purchase cost, remodeling costs, and any repairs that will be incurred during the duration of each tenant. Many states have strict requirements that must be met before you are able to rent out a property. It can cost thousands to bring a building up to code after it is purchased or to make necessary repairs after a tenant moves out.
2. Rent Collection
Along with great tenants who pay on time without trouble, there will always be those who are late and those who fail to pay at all. An effective rent management strategy is based around these two following points:
- Be prepared to move forward with an eviction of any problem tenants that cannot be resolved.
- Be knowledgeable and educate yourself on eviction laws in your state.
3. Repairs and Upkeep
Ignoring small repairs will always lead to bigger, and more expensive problems. If you aren’t sure whether you can afford to pay for home repairs, then it’s wise to reconsider a property investment until you can. Here are a few tips to managing property repairs:
- Ensure the tenants you lease to are responsible and will notify you should a problem arise.
- Catch small problems and make repairs before they have a chance to develop into bigger ones.
- Inspect your properties regularly, especially before a new tenant is scheduled to move in.
4. Financial Management
Any successful investment property that is generating a positive, monthly cash flow can quickly become a burden should you mismanage your finances. While it might be rare for one property to sit vacant longer than a few weeks, another might be empty for several months. In order to keep your investment property profitable, it’s important to save enough during periods of full occupancy to give you plenty to work with during slower months.
If you are in the market to purchase an investment property or if you’re looking for a new home, today’s market in the Garland, Rowlett and Rockwall areas offers many opportunities for potential buyers as well as those interested in becoming investors. Please give me a call, I would be glad to help you.