Can Just Anyone Become a Rental Property Investor?
Whether you already own a home or not – the opportunity to own a rental property exists. In the end there are just a few things you need in place to make it happen.
However, what’s important is knowing everything that goes into it after you have acquired a property.
Can Just Anyone Become a Rental Property Investor?
Obviously the first step is going into acquisition mode, which mainly means finding an area to invest and lining up the financing to buy.
Unlike when you buy your primary home, the financing options will be different. Investment properties and second homes are not treated the same. Rates will be different.
You can still get traditional financing though, be sure to look into all the options:
- Conventional loan
- Jumbo loan
- Home equity loan (based on the equity in your primary home)
- Home equity line of credit (based on the equity in your primary home)
- Cash-out refinance
Of course there is also private lenders as well, generally rates are a little higher but it is a resource.
As I mentioned – acquisition is the first step, bankrate has an awesome article covering key items to consider when looking for an investment property titled: How to acquire an establish a rental property
Be sure to remember, after you have honed in on a neighborhood and know your financing options that you are running numbers on potential properties to ensure it cash flows. Always use the scaredy cat property calculator!
How about all the items that go into owning and managing a rental property?
It’s really not that overwhelming as long as you understand what needs to be covered.
Taxes, Insurance and Laws – Oh my!
Rental properties are taxed different than your primary home. Items like depreciation are writes offs against your rental income, for example.
Also, the insurance cost will be a bit different then the policy on your primary home since tenants will be living in the rental property.
Speaking of tenants, we need to be sure we are on the right side of state and federal laws. Be sure you have an up to date lease, best if a lawyer gives it a look or draws it up.
Along with taxes and insurance there are other fees such as maintenance, advertising the rental, travel costs to and from the property, etc.
As they say, knowledge is power…
Be sure to learn these fundamentals so you can make informed decisions and create the wealth that rental properties can build.
Great starting info. My wife and I have started looking into rental properties and the biggest thing that scares us is dealing with tennants.
Yeah, I have been very lucky with all my tenant thus far. On the flipside I screen aggressively and rather be vacant an extra month to acquire a quality tenant that stays and pays. I did a whole chapter on my process in my book: https://scaredycatguide.com/book-store
Awesome, will have to check it out sometime!
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Some good information here.
Getting the right tenants plays a huge role in its success...i have been lucky to have had some good ones.
Yep, me as well. My screening process is rather aggressive but I have been fortunate with my tenants. I blog alot about rental property investing on my website https://scaredycatguide.com/category/real-estate-investing
These interest rates are making it more interesting to getting involved although it may be complex given the valuation in certain markets!
Yeah, interest rates are great but prices are high. Finding decent deals is still doable with some work.