Investing in real estate can be both a lucrative adventure and a daunting task. However, with the right advice, any beginner can learn to navigate the industry like a seasoned expert. So, if you want to learn more, keep watching to see our top 6 tips for new real estate investors.
1. Start with a single-family home
When starting to invest in rental properties, many beginners can feel confused by which type of property they should start with: multi-family or single family. In our opinion, the choice is easy: single-family homes.
Single-family homes are a solid choice for your entry into the world of investing in real estate. Among other benefits, they tend to have a higher demand among renters, making them a great way to generate a consistent income and an excellent choice for any new investor.
2. Know your financing options
When it comes to financing a new property for an investor, the process can be challenging. However, there are things you can do to make this process much smoother.
Do your research on all your financing options, both traditional and non-traditional, for your new rental property. Be sure to shop around for the financing that best fits your needs.
While a conventional bank is the most popular option when it comes to financing a home, there are many other creative options to choose from, such as owner financing, or hard money if you are considering a flip. Carefully consider your own specific situation when trying to determine which of these options is best for you.
Additionally, do not forget to set a budget and stick to it when you are purchasing a property. To be a successful real estate investor, you will have to financially plan ahead to prepare for any unexpected expenses or repairs that may pop up down the road.
3. How to find a good location that fits your goals
As a beginner, you may not know just how to find the best appreciating and best renting location for a rental property. However, real estate experts may be able to help you better identify potential locations.
Be on the lookout for areas with employment growth and expansion; job growth increases demand in those locations.
Consider neighborhoods with a higher concentration of existing rental properties; proven demand can help alleviate the stress of wondering if you can attract a renter.
Look for areas of gentrification or new construction; these neighborhoods often have growing value or appreciation in the coming years, which could be good for your investment.
It is in your best interest to evaluate the amount of rent you can earn for a given property before you make a purchase. Comparing your earning potential to your expenses can help determine if the property will perform well as an investment.
Try our free Property Management Calculator to help you explore what the return on your investment could look like!
4. Determine maintenance expenses and property condition
Before purchasing, consider the cost of preparing the property for rent, as well as the ongoing maintenance.
Older homes generally mean that soon, they may require more repairs and attention as appliances, roofs, flooring, or finishes. Determine if you are prepared to make some functional repairs or some cosmetic updates, and check whether these costs align with your goal for the property.
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Newer or recently renovated homes sometimes come with a premium price tag, but they also come with more peace of mind that the maintenance costs can be lower or even delayed for a period of time.
Regardless of the age of the property you purchase, you will need to provide a well-maintained property. Therefore, you need to ensure your maintenance expenses fit your budget.
5. Network (build your team before you need there is an emergency)
As you navigate the process of investing in real estate, make sure you always make time to network with those around you.
Whether they are real estate agents, contractors, other rental property owners, or property managers, these interactions can turn into a valuable network of contacts when you need advice.
Exchange your contact information and stay in touch with them over time. This kind of network can be an excellent tool when it comes to being a successful real estate investor.
6. Learn how to manage your property well
Finding your investment property can be a lot of work, but the real work begins after you have already purchased the home. Become familiar with what it takes to properly manage your investment in advance so you are prepared when the time comes.
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As a rental property owner, you will have to handle a wide range of responsibilities, including advertising, knowing your legal responsibilities (for example, the AZ Eviction process), drafting documents, collecting rent, making timely repairs, communicating with tenants, and so much more.
This is where hiring a property manager can be incredibly valuable. The right property manager will be able to take on all the tasks that would normally be your responsibility, so all you must do is sit back, receive your monthly rent payments and relax, knowing that everything is taken care of.
If you are looking for a property management company to help you get the most out of your investments, contact Service Star Realty today.
Service Star Realty
2929 East Camelback Road #119, Phoenix, AZ 85016
(480) 426-9696
