Sure, investing in an income property seems like a task only attainable in a board game, but taking that leap of faith may be more lucrative than you think. Why? Because the real estate market is blazing hot, and rental properties are no exception.
According to Rhodes & Co. realtor and investment guru Pat Phillips, the local renter audience is as broad and diverse as ever, but before you put a down payment on your top hat and monocle, consider these tips for investing an income property.
Make sure you’re in a healthy financial state.
There’s no right or wrong answer to the “should I pay cash or should I finance” question. Either works, TBH. But, Pat says that if you decide to finance, it’s wise to pay down any other personal debt first to avoid digging yourself into a deep hole.
Oh, and you’ll need a cash cushion to fall back on if your tenant packs up and skips town without paying rent. The tenant might be all the way in Reno under an alias, but that mortgage isn’t going anywhere.
Be ready to commit to being a landlord.
Because when the HVAC breaks on the hottest day of the year, your tenant will have no bones about calling you 12 times in a row before you answer. Landlords should have the flexibility to be available to fix things in an emergency, or they should be equipped with a handy dandy list of “problem solvers” to assist with the issue.
Invest in a desirable location.
Okay, rental properties are hot right now, but they’re also only has hot as the location. So, the odds of you scoring hella Benjamins on your property beside the local chicken plant are slim.
Find the right tenant.
Yes, that means you need to put in a little extra work. Establish a credit score minimum, run a credit check and run a background check. You’ll want to have that extra cash cushion in case your tenant skips town, but you also don’t want that tenant to skip town. It takes time to find the ideal candidate.
“Overall, the benefits of investing in real estate are numerous,” Pat says. “With well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages and diversification and the possibility to leverage real estate and build wealth.”
Have more questions? Contact Pat at 910-639-1550.