Thinking about purchasing an investment property? Real estate has produced many of the worlds wealthiest people, so there are plenty of reasons to think that it is a sound investment. Experts agree, however, that as with any investment, its better to be well-versed before diving in with hundreds of thousands of dollars. Here are the factors and challenges you should consider before buying your first rental property.
- Investing in rental property can be lucrative, but it can come with many challenges.
- Borrowers usually need to secure at least a 20% down payment for a rental property mortgage.
- Being a landlord requires a broad array of skills, from understanding basic tenant law to fixing a leaky faucet.
- Experts recommend having a financial cushion in case you dont rent out the property, or if the rental income doesnt cover the mortgage.
Decide If Youre Cut Out to Be a Landlord
Being a landlord can be a good way to earn real estate income, but it’s not easy or glamorous. In addition to choosing the right property, prepping the unit, and finding reliable tenants, there are always maintenance hassles and headaches.
Do you know your way around a toolbox? How are you at repairing drywall or unclogging a toilet? Sure, you could call somebody to do it for you or you could hire a property manager, but that will eat into your profits. Property owners who have one or two homes often do their own repairs to save money.