For many of us, buying a single-family home or duplex sounds like a good idea for creating additional income. Of course, we know that there’s more to it than just making an offer on a property that looks like a good bet. All bets are off when basing a financial decision on the first impression. We need to do the homework and understand the numbers to expect solid returns on our investment. This isn’t the time for a misinterpretation of facts or an emotional purchase.
1. Educate yourself.
To prepare properly, learn as much as possible. Take the time to read books and articles. Talk with investors, realtors, property managers and members of local investment clubs. There are courses offered by community education and seminars on the subject. Find out what is available in your community. Listen to those who have taken this route and learn from their mistakes and triumphs. They have a lot of wisdom and are willing to share it.
2. Choose your support team.
You will need professional, experienced guidance which might include advice and services from a realtor, loan officer, title company, home inspector, accountant, tax advisor, attorney, property manager, insurance agent and possibly a real estate investment partner. Think about which of these you might need and build the relationships. They will help you gain knowledge and confidence in addition to providing the services you’ll need.
3. Location is important.
The location of your rental property is a key ingredient to future success. Buy something within a reasonable travel distance from your home and office. There’s no doubt that you will make many trips to the property for renovations, upkeep, and the inevitable emergency repairs. Even if you plan to hire most of it out, it’s still the best policy to check in often so nothing gets out of hand.
Location is also important from the tenant’s viewpoint. Find something in a nice neighborhood, close to schools, retail and parks, with well-maintained homes and yards and low crime rates. The home should be appealing to renters who have a good work ethic and value a peaceful family life.