Guest Blog - by Alyssa Strickland

If you’re looking to invest in your long-term financial security and generate monthly income, investing in a rental property is one of the most tried-and-true methods of doing so. Along with boosting your short-term finances, owning a property can help you build wealth and open the door to other investment opportunities.

Of course, becoming a real estate investor is not as simple as finding a property online and paying over the phone. The process has many moving parts, and it can be overwhelming when you’ve never experienced it before. Below, Stephen Aubert provides some essential tips for buying the right investment property!

Make a Plan  

You don’t want to just buy a random property and call it a rental. Before you dig too deep into your property search, do your homework to learn about what type of property you actually need.

Determine whether you want to invest in a single-family or multi-family property, and think about what type of area will work best for your goals. Also, determine your budget for the property, and learn the various factors that make up a promising investment property.

Pick a Good Location

Location is the most critical aspect of any investment property. You can fix the flaws in a home and add features that will attract renters. But you won’t be able to pick up your property and move it to a different, more valuable location.

If you are buying a vacation rental, make sure the property has plenty of dining, entertainment, and shops nearby. If your goal is to rent out your property long-term, consider the schools, grocery stores, and other essential establishments in the area. Moreover, research the average rental rates and appreciation value of the area before committing to the purchase.

Assess the Necessary Improvements      

No property you come across will be perfect. The key is to find one that will require minimal repairs and improvements. For example, you will need to repair any issues with the roof, plumbing, electricity, and HVAC.

You will also need to think about how you can decorate the home to attract more guests or tenants. Curb appeal can go a long way, so consider painting the front door an inviting color, replacing the mailbox, and sprucing up the landscaping,

If you can afford it, think of any renovations that can appeal to renters. Perhaps you could convert the basement into a livable space, such as an entertainment center, a yoga studio, or a home gym. Depending on your experience and skills, you could try to perform the renovations yourself. But it could be safer, less stressful, and more efficient to hire a professional contractor.

Note that if you are adding carpet to your basement, you will need to ensure there is a subfloor installed to help prevent mold.

Secure the Proper Financing      

Even if you can afford to pay for your first investment property in cash, consider pursuing financing. Rather than tying up all of your available funds, this will leave you with money to invest in additional properties if you choose to.

Unlike with primary residences, you will need to plan for at least a 20% down payment when financing a second home or investment property. Make sure that you only commit to a loan that you can pay each month while also accounting for insurance, taxes, maintenance, and any other expenses involved. Consider working with a CPA like Stephen Aubert to keep your finances in good shape!

Figure Out Your Management

Finally, are you prepared to be a landlord? Or does the thought stress you out? Some first-time investors choose to manage their investment properties themselves. But hiring a property manager can be well worth the costs if you have room in your budget. A reputable property management company will take care of tenant relations, collecting rent, maintenance and repairs, and many other duties.

Buying rental property is an excellent way to generate income and build generational wealth. Remember the tips above as you make a plan for your first investment property purchase. And never stop seeking to learn how you can better position yourself for success!

Are you looking for a top-tier CPA for your corporate or personal finance needs?
Contact Stephen Aubert today! (647) 200-4657