Interested in purchasing an investment property, but don’t know where to start? We are here to break it down for you! Let’s take a look a 6 steps to buy your first investment property!
6 steps to buy your first investment property
01. Decide on a price point – A good rule of thumb is to use the 1% rule. For example if you purchase a home for $100,000, you’ll need a minimum monthly rent of $1,000.
02. Pick a location(s) – Airbnb guests aren’t worried about the school district and long-term renters may not need walkability 24/7. Decide which way you’d like to go and pick a location that way.
03. Determine rentability – What are your target renters looking for? Long-term renters may say creature comforts like 2-3 bedrooms, washer/dryer, dishwasher, and storage. Short-term renters usually want to be close to (or far from) the action.
What are your target renters looking for?
04. Purchase the Property – This process will be similar to purchasing a primary residence. Your lender may require a higher down payment and loan requirements may be a bit different than on a primary residence, but the steps are pretty much the same: offer, escrow, closing, rent!
05. After Closing – You may want to consider hiring a property manager to take care of renting and maintaining your income property. These will typically run you 15-25%.
06. Offset Additional Mortgage – For an investment property, you will need 20% down but the great thing is that you can include rent as part of your income, so this will offset the additional mortgage!
Ready to get the ball rolling on your investment property journey? Click here to schedule a one on one buyer meeting with a Sage & Cedar agent!