Acquiring your first Pocatello single-family rental property can be an enjoyable opportunity. But similar to all investments, there is always some risk involved. To be assured that your first investment property purchase in Pocatello grows into as profitable as you hope it will be, there are a lot of things you should know before you buy. Through keeping the most crucial of these factors in mind, you can make a success with your first rental real estate purchase.
Also, one of the first things to keep in mind when purchasing your first single-family rental home is to put clearly defined end goals. Once you begin your property search, you must make some effort to know what characteristics you’re aiming for in your investment property. Let’s say you might be searching for properties in a certain area, with a specific number of bedrooms, or minimum square footage. By knowing the specifics, you can refine your search criteria and locate potential properties faster.
In terms of determining what characteristics you are searching for in a property, it is important to be financially prepared to purchase an investment property. Industry experts advise you to pay all of your personal debt and save for a down payment before you go to the next step, which is property search. Reduced personal debt can make you qualified for more favorable loan rates, while approximately all mortgage loans for an investment property will require a 20% down payment. Financing in advance is another crucial step, but be be aware of high-interest loans or mortgage products that seem a little too good to be true. By prequalifying with a reputable mortgage lender, you will be ready to seize the investment opportunities as they arrive. By making financial readiness a priority, you can more confidently buy that rental property when the time comes.
Now after following these important preliminary steps, the search for the right property begins. The essential thing to understand throughout your search is that you should run a series of numbers on each prospective property, including your margins, operating expenses, and expected returns. There are a lot of new investors that make serious mistakes here.
New investors fail to include all of 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 goal of 10% and a 6% return in your first year means that you have a profitable investment.
Lastly, it is necessary to note that an investment property is just that, an investment. Getting attached to a particular property or allowing emotions to guide your decisions can bring you disappointment. Also, the property you buy is not necessarily a property that you would ever live in yourself. For your first investment, industry experts recommend opting for low-cost properties in high-demand areas. But avoid fixer-uppers, unless you are a highly knowledgeable home remodeling professional or know a quality contractor who will do the work for less than the going rate. Your first single-family rental property should be recognized as your stepping stone toward a long and profitable investment career, rather than the end goal in itself. In this manner, you have to keep yourself on track and your investment properties in the black.
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