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Buying Your First Investment Property? Don’t Do Anything Until You Read These Tips For Success.

March 10, 2021

(Photo via Pexels)

Written by Katie Conroy

Rental properties can be a lucrative way to generate passive income. Although there is definitely a high degree of risk involved with the purchase of an investment property, the reward can be well worth the effort. The key to mitigating these inherent risks is by utilizing expert knowledge and advice. This is especially the case with first-time investment property owners.

If you are gearing up to purchase your first-ever rental property, the team with Mighty House Home Improvement Radio has several critical tips that can help you achieve success in your endeavor.

Form a team of trustworthy experts

When it comes to buying and managing an investment property, the first rule is to not do everything yourself. Even if you’ve spent hours reading expert blogs, and watching YouTube videos, you simply cannot do it all alone. In fact, this is one of the quickest ways to lose money.

Instead, surround yourself with a team of home-related experts. Enlist the help of a top-tier realtor, home inspector, repair professional, and so on. You can find quality individuals in your area by asking for recommendations from your circle of colleagues. Alternatively, you can attend networking group meetings to connect with professionals directly. While you’ll be spending money up front, you’ll receive insider knowledge that is impossible to know as a first-time investment property buyer.

Protect yourself with an LLC

One of the risks of rental property ownership is the potential for financial loss. Reduce your risks significantly and protect your assets from litigation by establishing a limited liability company (LLC) for your investment property business. In order to form an LLC, you can hire a lawyer — or you can use a formation service (which is considerably less expensive).

Set aside cash for the unexpected

Experts agree that you should set aside as much as 40% of your rental property income for expenses that arise. However, at the start of your business, you won’t have months of income to use for unexpected expenses. Prevent your chances of going into debt by setting aside cash for emergency repairs, appliance replacements, and other fees and payments that you did not plan on.

Seek guidance in establishing rental policies and pricing

As with other aspects of your new investment, consider reaching out to rental property experts for their advice on pricing and policies. Although it may seem like something you can handle by yourself, an experienced professional will be able to help you navigate all legal requirements, and will help you price your rental unit(s) to maximize your investment.

Consider the use of a property management company

Looking to use your new property solely for the income it generates? If you are not interested in handling the day-to-day management duties involved with a rental property — including rent collection, repairs, and the like — hire a property management company. These companies are often locally-based, and can screen tenants, market your property, set up property tours, and handle move-in and move-out inspections.

Purchasing and managing an investment property is no easy task. There are lists upon lists of responsibilities involved. However, when you utilize the advice and strategies of successful rental property owners, you can achieve success for yourself. The most important thing that you can do at every stage is ask for help. As a first-time buyer, you aren’t expected to know everything. Rather than trying to save a few dollars here and there, working with experts who know what they are doing provides a sure path to maximizing your income.

Mighty House Home Improvement Radio is your go-to source for all things related to home improvement. You can now watch episodes of the show on YouTube

 

 


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