Are you thinking about buying an investment property? With rates being so low and rents so high, now is great time to do so. Here are a couple of tips if you’re thinking about taking that step into investing.
- Have money saved up. The better the down payment the better the interest rates. If it’s a single family, you’ll need at least a 20% down payment but if it’s multi-family you’ll need 25%.
- Research the area you’re thinking about purchasing. This may seem very obvious but looking into the area you’re thinking about investing in is crucial. If you purchase a house for a great price but in an iffy neighborhood you won’t be getting much from your investment. Find out what the crime rate is, are the schools around the area ranked high, etc. These minor elements may end up being extremely important when renting the home or selling it in the future.
- Know the rent rates. Realtors will be able to break down the rent prices in the neighborhood but make sure to keep in mind the mortgage you’ll be paying. You always want your mortgage to be less than what you’ll charge for rent. Also, find out if there are any additional charges with the property like HOA fees.
- Know How It’s Zoned. To maximize the potential of the home, make sure to know how the property is zoned. You’ll want to find out if it can be expanded or resized. Moreover, you’ll want to know the classification and if there are any limitations to the property.
- Look for local financing rather than big banks. Although it seems easier to get a loan from a bank that you already work with, you’ll get a better deal and customer service from local mortgage lending companies. Local Mortgage Lenders know the market better and can be more flexible if your financial situation isn’t cut and dry. Furthermore, mortgage Brokers will be able to offer you a variety of loan products unlike big banks.
Investment properties are a great way to earn money without doing much. Although you’ll need a heftier down payment than on a first or second home, it comes with a lot of benefits in the long run. If you have any other questions about investment properties, feel free to call us at 843-388-5763!