Investing in rental property can be a great way to add to your portfolio and to earn a great deal in the future, but spending too much, getting the wrong property, or not researching it properly can mean that it takes longer, and can even cost you money for a long time. Luckily, the easiest way to ensure that your property is a good deal is to properly research it and ensure that it is worth the investment. The following tips from local Redmond Property Management should help you get started on looking into your property.
Compare Everything – If you were buying a car you would probably compare as many options as possible, and you should do the same for a property investment. Set a budget, decide on a maximum and a minimum, and go from there. You also want to compare in multiple different areas, and keep in mind that if you are hiring professional property management, then it doesn’t necessarily have to be near where you are. Compare factors like floor space, age, last remodel, local amenities, interior space, whether or not it’s modern, and which schools and workplaces it’s near to.
Research – You should approach every open house, every viewing, and every real estate auction with questions. Why is the previous owner selling. Is there construction nearby or planned nearby? Are there any permit or other city issues? Any back taxes or liens? What did the home cost the previous owner? You should also go the city hall to check for planning permits nearby, check the location for flood and other danger zone issues, and inquire around with either the Puget Sound Renters Association or with local pest companies to see if the area has a problem with pests. These questions, and the time spent finding the answers, can greatly affect your profit. For example, if you’re in a flood zone, you will pay more for flood insurance, which is an immediate extra cost.
Financing Issues – You should go into any investment purchase with as much capital as possible, but if paying in cash isn’t possible, then you want to approach financing as intelligently as possible. Make sure you have the best credit possible, go for the 15 year mortgage option if you can afford it, and ensure that you get the best interest rate you qualify for. Why the 15 year mortgage? You end up paying significantly less on the mortgage, even though you have to pay more every month. If you can make that work with rental fees, you’ll be in the clear and making money that much sooner. Just make sure your rental income is at least 30% over the mortgage payment, because you need 30% for maintenance and other services.
Get Help – You’re probably not a real estate attorney and you’re probably not a property management professional. If you’re not, don’t be afraid to ask for help. Whether it’s a professional real estate lawyer looking at the price of the house, paperwork, and any permits or liens, or a Redmond property management company to tell you what to charge for rent and save you money on maintenance, the cost of getting help is usually much less than the cost of paying too much, or messing up your leasing contract.
If you’re investing in property in the Redmond area, you can make a lot of money, especially if you get a good deal on the initial investment. If you need help managing it, contact us for a free quote, and to find out what we can do for you.