Getting your first Twin Falls single-family rental property can be an enjoyable experience. However, compared to all investments, there are particular risks involved. To ensure that your first investment property purchase in Twin Falls becomes as effective as you hope, you need to learn a few things before purchasing. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property will you pay attention to? How will you finance your purchase? In what follows, we’ll respond to these inquiries and go over important details to make purchasing your first rental property a rewarding experience.
Define Your End Goal
When acquiring your first single-family rental home, one of the first actions you should take is to set clearly defined end goals. Before you begin your property search, you need to put some effort into identifying what qualities you want in your investment property. Let’s say you may be seeking properties in a particular area with a specific number of bedrooms or minimum square footage. You can even market a certain group of renter demographic, like college students or retirees. Knowing the specifics enables you to refine your search criteria and locate potential properties faster.
Prepare Your Finances
In addition to knowing what qualities you are searching for in a property, it is essential to prepare financially before acquiring an investment property. Industry experts recommend paying down personal debt and saving for a down payment before beginning your property search. Reduced personal debt can help you to qualify for better loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Planning to finance in advance is another vital step, but look out for high-interest loans or mortgage products that seem too good to be true. By prequalifying with a dependable mortgage lender, you will be prepared to seize the investment opportunities as they arrive. By prioritizing financial readiness, you will be able to acquire that rental property with more confidence when the time comes.
Crunch the Numbers
After taking these vital preliminary steps, the search for a suitable property begins. One key aspect to consider throughout your search is that you need to run a series of numbers on every possible property, such as your margins, operating expenses, and expected return. This is where a lot of new investors make major mistakes.
New investors need to remember to include all the expenses related to purchasing and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin of 10% and a 6% return in your first year means you have a profitable investment.
You need to remember that an investment property is just that, an investment. Getting attached to a certain property or permitting emotions to control your actions is not a good idea. In addition, the property you buy is not necessarily one you would ever live in yourself. Industry experts suggest picking low-cost properties in high-demand areas for your first investment. But avoid fixer-uppers unless you are a highly skilled home remodeling expert or know a reliable contractor who can get the job done for less than the going rate. Your first single-family rental property should be viewed as the first step toward a long and profitable investment career rather than the end goal. This way, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
At last, remember that buying a rental property is just the first step. To ensure your investment pays off, you need a proactive management strategy. This is when a Twin Falls property management company might be beneficial. As local market experts, property managers can help you locate off-market investment properties, analyze market conditions, set rental rates, and much more. As more successful investors will inform you, the right property management company is an important partner in lucrative rental property investing.
Originally Published on March 13, 2020
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