Owning your first Austin single-family rental property can be a wonderful experience. But as with all investments, there are some risks involved. There are numerous things you should learn before buying to guarantee that your first investment property purchase in Austin becomes as successful as you hope it will be. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property will you target? How will you finance your purchase? In what follows, we’ll go through these concerns and other crucial information you’ll need to know to make purchasing your first rental property a rewarding experience.
Define Your End Goal
One of the most important things to think about when making your first single-family rental home purchase is to set clearly defined end goals. Before beginning your property search, you need to invest some time to discover what qualities you are looking for in your investment property. For illustration, you might be searching for properties in a particular area with a specific number of bedrooms or minimum square footage. You can also concentrate on a certain renter demographic, including college students or retirees. Learning the details helps you refine your search criteria and locate potential properties more quickly.
Prepare Your Finances
Along with determining what qualities you are looking for in a property, it is recommended to prepare financially before you purchase an investment property. Industry experts recommend paying down personal debt and saving for a down payment before starting your property search. Reduced personal debt can help you to qualify for more favorable loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Arranging to finance in advance is another crucial step, but watch out for high-interest loans or mortgage products that seem too good to be true. By prequalifying with a reputable mortgage lender, you will be able to seize investment opportunities as they arise. By prioritizing financial readiness, you can more confidently buy that rental property when the time comes.
Crunch the Numbers
After taking these crucial preliminary steps, the search for the perfect property starts. One critical factor to think about during your search is that you have to run a series of numbers on every potential property, including your margins, operating expenses, and expected return. This is where many newbie investors make critical errors.
New investors should keep in mind to include all the expenses related to purchasing and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin of 10% and a 6% return in your first year means you have a profitable investment.
Stay Objective
It is worth noting that an investment property is just that, an investment. Getting attached to a specific property or letting your emotions influence your choices is not a good idea. In addition, the property you buy is not necessarily one you would ever live in yourself. Industry experts propose buying low-cost properties in high-demand areas for your first investment. But stay away from fixer-uppers unless you are a highly skilled home remodeling expert or know a trusted contractor who will finish the job for less at a lower going rate. Your first single-family rental property must be deemed as the first step toward a long and profitable investment career rather than the end goal. In this way, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
As a last reminder, purchasing a rental property is just the first step. To guarantee that your investment prospers, you need a proactive management strategy. This is when working with an Austin property management company can be beneficial. As local market experts, property managers can help you locate off-market investment properties, analyze market conditions, set rental rates, and much more. As more seasoned investors will tell you, the right property management company is an invaluable partner in profitable rental property investing.
Once you have found the ideal investment property, make sure to hire the best Austin property management team. Contact Real Property Management Advisors at 512-777-2597 now.
Originally Published on March 13, 2020
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