You won’t be able to get away with a small down payment for an investment home. Most traditional financing routes require 15% if not 20% down on an investment home. Also keep in mind that investment properties come with higher interest rates as well.
Hidden Expenses and Costs
It is always smart to have some cushion in your budget to cover unexpected costs and expenses that may arise after buying an investment property, especially if you plan to do renovations. If this is your first investment purchase its smart to buy a home that requires minimal rehabilitation prior to renting out. Even if you buy a home that doesn’t need any work, always keep money set aside for HVAC issues or appliance fixes.
Rental Income: What to Expect
You always want to get a return on your investment, so this is where a little homework is required. When trying to figure out what to charge for rent, its important to research comparable properties in the area and see what they are charging. Obviously, you want to make sure that the mortgage PLUS taxes and insurance are covered by the rent payment so you don’t end up losing money every month.
How to Manage your Rental Property
Some people like being landlords and others let a property management group take over. If you don’t think you will have time to be available for your tenants to answer questions, schedule maintenance, or keep up on rent payments, you may want to bring in a property management group to help out. Although, this service does not come free so you will need to configure that into your costs for the investment property.
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