It is exciting to think about purchasing your first rental property. Building a real estate portfolio that can bring extra income in can be a financial game-changer. But how can you be positive that it is the right time? This post will go over some indications that the timing is indeed right, and it makes sense to purchase your first income-generating investment property.
- You know what you want to achieve, and how you wish to go about it. Some people get into investing in real estate because it just sounds cool to them. Maybe they stumbled across an opportunity, and seized by a whim, they decide to buy it. That can work out sometimes, but not every time. It is important to know why you want a rental property, and how to best use that property to achieve your goals. Are you looking for some side income while you do something else? Do you want to eventually go into full time property management? Will this be your only property, or do you plan to add on a dozen more over the coming years?
- You can afford the down payment. To purchase an investment property, you will need to put down a larger down payment than you would to buy a primary residence. So, along with making sure you can afford the property itself, you will need to make sure you can cover the amount of your down payment.
- The math suggests your plan is financially viable. It only makes sense to invest in real estate if you have good reason to believe that the property will add to your wealth over time. If you expect to lose money on the property, then it is not the right one. You will need to keep searching until you can find one that will bring in enough cash flow—or that you can later resell at a substantial enough gain—to be worth the investment.
- You have the time, energy and resources to take care of the property. Let’s say you have found a property to buy that could be financially profitable, and you can afford the down payment. You know your purpose. There is one last question you need to ask yourself: are you ready for this? Owning a property may seem like a way to earn “passive” income. And to a degree, that is true. But it isn’t as passive as you might think. Even if you live in a different state or even a different country, you will need to find a way to manage the property and your tenants. In fact, doing that from afar can pose some extra challenges.
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You will probably hire a property management company if you will not be located close to your rental property. That will take a lot of the work off your plate and make it much easier, but there still will be work involved on your end with handling the property. If you are ready to take on that responsibility, great—this may be the perfect time for you to buy your first investment property.
Lending Bankers Mortgage can help you purchase rental properties throughout Florida with competitive loans. If you are ready to get started, please call (786) 220-1100 to schedule your consult.
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