Pre-sale inspectionIf you love the home, inspect before you make an offer or sign a contract. Worst case scenario, you spend a few hundred dollars delving deeply into a home you don’t purchase.
Steps To Successful Rental Property Purchases
Purchasing rental properties is a very good, low risk, investment and a perfect way to create residual income. Here are 5 great tips to utilize when deciding which properties are just right for you.
1 - DETERMINE AREA RENTAL RATES
Conduct your own research or higher a real estate agent to determine the rental rates in the area. This will help you in determine how
much you want to spend on the home and/or repairs.
2 - UNDERSTAND ROI (RETURN ON INVESTMENT)
ROI is a calculation of how much time it will take you to earn your initial investment funds. $35,000 property rents for $850/mo.
$850 x 12 months = $10,200 annual rental income
$10,200 - 20% (subtraction from income for taxes/insurance and repairs) = $1530
$10,200 - 2,040 = $8160
$35,000/8,160 = 4.3 (In 4yrs 3 mos you will have made your entire $35,000 initial investment back)
3 - DO YOU NEED PROPERTY MANAGEMENT
Are you available or do you have repair people available to handle repair issues? If not, you may want to consider hiring a property
management company to assist. Management generally charge 7 - 10% monthly to manage the property. Be sure to factor that in to your
expenses when determining your ROI.
4 - CONSIDER A PROPERTY WITH AN EXISTING TENANT
Purchasing an existing rental property will give you instant rental income starting the day you close. Be sure to request rental history and
speak to the existing tenant regarding their desire to remain in the property after sale.
5 - GET AN INSPECTION
Inspecting the property will give you a good idea of the types of repairs and the cost of making those repairs. Try to avoid looking at sales
price as the only factor for purchasing a rental property.
Ready to start buying? Have more question? Please call/text/email at your convenience or click below for a list of rental properties for sale.
UNITED REAL ESTATE
EMAIL: [email protected]