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Are you interested in buying one or more investment properties? Whether you’re in the prime of life and have decades ahead of you or are nearing retirement and want to bolster that nest egg, one way to generate wealth is by investing in real estate.
It’s not for everyone — especially if you have a low tolerance for risk. But if you can withstand the ups and downs that come with the territory, real estate investing can pay dividends. That’s especially the case if you invest for the long haul with no immediate plans to cash out.
If you want to buy a rental property in 2023, what strategies or advice do you need to be successful? Continue reading to look at three tips for successful investment in rental properties.
Successful real estate investing means understanding the market dynamics inside and out. Whether you want to buy a rental property close to home or in some other area, you must ensure you do your homework to know what factors influence the real estate space.
Do you want a single-family home or a multi-family unit? Is it a buyer’s market or a seller’s market? Is the community attractive in terms of great schools, access to medical care, access to shopping, access to parks, and a minimal crime rate? Are real estate prices reasonable? You can answer these and other questions when researching the real estate market.
The purchase price isn’t all that you need to consider when buying an investment property. You need to understand all applicable costs before taking the plunge and purchasing real estate — especially if the goal is to rent it out.
When calculating the upfront costs, you must consider:
If you’re a handy DIYer, you might be able to save some money. But it’ll still cost you.
While it’s possible to make a fortune by investing in real estate, it’s also possible to see your investment burst into flames. That’s one reason it makes sense to manage your risk when investing in real estate. If you already have a massive consumer debt albatross around your neck, think twice before you take on a mortgage loan.
When preparing to buy a rental property, make a down payment of at least 10%. If you can afford a down payment of twice that amount or even more, that’s even better. It’ll help you lessen your real estate investment risk if you can table a good down payment. And going this route will often result in a better interest rate for your mortgage loan.
You must also have enough saved so you don’t have to get stressed out over maintenance or repairs. If there’s one thing you can bet on is that unexpected expenses will rear their ugly heads from time to time. Setting aside funds for such occasions is a good idea.
Final Thoughts
Investing in real estate can be a financially rewarding decision if you go about it the right way. If you take the plunge and get into the rental property space, you’ll need to consider whether you want to manage the property independently or hire a property management firm.
You can have a property manager in your corner for a small percentage of the monthly rent your tenants pay. It will find quality tenants, collect rent, arrange maintenance and repairs, help fill vacancies, and more. Being an owner-landlord isn’t for the faint of heart. Hiring a property manager means you won’t be on call 24/7, so you can still have a life.
