If you buy a property that will not be your primary residence, you have to put 20% down. That’s because you will rent it out. In a lender’s eyes, renters do not take as good of care of a property as someone who lives in the house that they own. So lenders want to see 20% equity in a property incase something happens.
Look up Rental Prices
The most important question is, ‘what can I rent this place out for each month?’. You want to make sure your rent coverages your mortgage and taxes and creates a rainy day fund for repairs etc. I’m able to see what places have recently rented out for in the area that you are considering buying in. This way you can back into the numbers and see what your return on investment will be.
Fix It Up to be Rental Grade
There’s a difference between the quality of house someone expects from a rental versus when they are buying a place. It’s important that you don’t over go overboard on remodeling. Sometimes places just need a fresh coat of paint throughout, new appliances, fixing an interior door, and adding shelving to be rental ready. Think twice before installing those high-end granite countertops that will set you back $150 a sq/ft.
Hire a Property Management Company
Do you live far from your potential rental property or do you find yourself traveling for most of the year? You can hire a rental management company to handle the day to day operations of your investment property. They can arrange for a plumber, handle a tenant who lost their key, and much more. For some, having a management company handle their rental gives them a peace of mind. For others, it’s necessary given where they live in relation to their property. Cost wise, expect to pay 8-10% of the rental price per month for a property management service.
Author:Emily Terpak Phone: 609-605-6507 Dated: October 17th 2018 Views: 10 About Emily: ...
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