Real estate can be a great part of any investment strategy to diversify your portfolio. However, just as you do research for investing in stocks and bonds and work with an expert, the same is true for investing in real property. First, you need to evaluate if you are really ready for this step. Here are a few key points to keep in mind.
- Understand that the income might be inconsistent with investment property. There may be months when you do not have a tenant. Make sure you are prepared for that.
- Consider all of the costs such as insurance, property taxes, and maintenance costs.
- Do you really want to deal with tenants and maintenance, or do you want to hire a rental management company?
- If you need financing make sure to get pre-approved first so you know what financial figures are available to you.
If you decide that investing in real estate is for you, make an appointment with an experienced agent. Having an expert of the area or areas that you are looking to purchase your investment property will be very helpful to develop the right property investment strategy. The goal is to find a property that will provide both a positive annual cash flow, as well as, a property that will add value to your overall portfolio.
Many first time property investors start with a single-family residence to rent out. Develop two budgets. Budget I should cover all of the initial closing cost and any immediate property updates such as a fresh coat of paint. Budget II is for monthly operating costs. Monthly operating costs should include a portion designated for purchasing items for the home such as a water heater or new air conditioner unit. No one wants any surprises!
It is also a good idea to find a contractor if you are going to manage the rental yourself. If you are using a rental management company, they generally will already have licensed and bonded contractors, plumbers, and electricians.
As always, it is best to work with experienced professionals for your real estate investment needs. If you would like to connect directly with Julie Ann, email JulieAnnProbst@gmail.com.