Investing in real estate is an excellent way of increasing your net worth, by earning a profit from properties that you own and rent out. If you’re new to this, you may be looking for the first investment property that you can rent out for profit. Before diving in, you should consider several things to ensure that you make good investment decisions.
Calculate Expenses and Profits Beforehand
Before you pull the trigger, it’s important to calculate expenses and income to determine what you can afford. A successful property creates a cycle of financial return that becomes self-sustaining. Keep in mind that renting out a home investment isn’t instant income, and if you’re not careful you can end up losing money. Write a list of all expenses that are associated with the property, which may include HOA fees, taxes, insurance, landscaping, and repairs. The rental price should be significantly higher to ensure that you can earn a profit. Also, keep in mind that the market determines the rental price. You will need to compare local pricing to determine if the potential rent is higher than expenses.
Choose a Low-Cost Home as a First Property
When it comes to owning your first investment property, experts suggest choosing a low-cost home. This is less of a risk and will allow you to get your feet wet. A low-cost home will allow you to afford some extra vacancy loss, and repair expenses. Some people recommend starting with a home around $150,000. Aftereward, you can renovate the home accordingly in order to raise the home value and make it more appealing to renters. However, it’s important to avoid over-rehabbing the property. In order to stay within budget, Rules of Renovation recommends rolling with the punches and cutting back when you need to. This will ultimately ensure that you profit from your investment.
Finding Good Rentals in Las Vegas
Don’t focus on only one neighborhood. You can find the best deals by searching all over town and not limiting yourself to a small area. Consider consulting with a property manager to help you determine potential rent prices on a home you are considering. Some neighborhoods may provide better average returns on investment when renting out a home there. In addition, consider the source. A realtor who wants to make a commission on the sale of property may be overly optimistic about potential rents.
Hire a Property Manager to Avoid Unnecessary Headaches
For new landlords, it can be challenging to rent out an investment property effectively and profitably. If you want to avoid headaches or issues, consider hiring a property manager who can take on all of the responsibilities of finding a tenant, collecting rent, and managing repairs. You can free up extra time in your schedule and avoid conflict by hiring someone who is experienced to look out for your interests.
By understanding how to buy an investment property, you can avoid common mistakes that other people often make. You can become more skilled in locating good deals on homes to rent out, to maximize profit and reduce your risk.