Are you planning to purchase a rental property in Baltimore? Well, the industry has produced some wealthiest people in the world, hence, it would not be wrong to say that this is one of the best businesses to invest in.
But every investment comes with risks and challenges. So, it’s important to be well-versed before diving into a business you are with hundreds or thousands of dollars.
For most people, the main purpose of investing in real estate is to make money with profits. But, buying an investment property is not just enough, you will have to take care of it and manage it to run your business successfully and ensure regular cash flow.
In this article, you will find some great tips for buying your first rental property.
Do you have the potentials to be a landlord?
A landlord needs to be an all-rounder. This means when it comes to repairing drywall or unclogging a toilet, you will have to be the handyman. Of course, you can hire handymen for all the repair issues or you can hire a property manager, who will look after all such requirements, but this won’t be beneficial for you in monetary terms. Most landlords who don’t own too many rental properties handle repairs by themselves to save money.
So, before digging into the real estate industry, ensure you are ready to take responsibility and then buy your first rental property.
Choose the right location
If you have made your mind to invest in rental properties in Maryland then choose the right location. Location doesn’t specify the city or state, but also the locality. So, from choosing the right city to the right locality, you will have to think about the location where you want to have your first investment property.
Should you buy or finance
Before investing in real estate, investors want to know whether they should buy a property by paying cash or should they finance it? That depends on your goals. Paying cash will help you generate regular cash flow while financing will provide greater returns.
Beware of high-interest rate
The cost of borrowing an investment property may be low, but it has higher interest rates than traditional mortgage interests. If you are planning to finance your investment property then always check the interest rate and go with low mortgage interest rates.
Buy a low-cost home
Experts and experienced investors advise buying a low-cost home initially. The more expensive the property, the greater your expenses will be. Experts suggest for the properties that rates start at $150,000. Try to find it in the upcoming good neighborhood.
Know your legal obligations
As you will hire tenants for your Baltimore rental property hence, you need to be familiar with the landlord-tenant law in your state and locale. You must know about your tenant’s right as well yours being a landlord. Know your obligations regarding the tenant’s security deposit, lease agreement, eviction rules, and fair housing to avoid any type of disputes between you and your tenants.
We have already talked about the tips that will help you to buy your first rental property. But there are a few mistakes that all first-time investors make while buying their investment property. You must take care of all these things to buy the right property that will ensure regular cash flow.
Common Mistakes to Avoid While Buying First Rental Property
Not checking your credit score
If you want to take a loan to buy your investment property then your lender will investigate your credit history. This ensures the lenders whether you will be able to pay the loan or not. If you have a bad credit score or any problem with your credit score will lead to your loan application rejection. Or even if get approved they might charge a higher interest rate. So, check your credit score before deciding on buying a rental unit.
Not calculating the overall cost of buying a house
You should weigh the full cost of investment because there are several expenses that will come your way of homeownership.
Avoid these mistakes if you want to make your first experience of investing in the real estate business
A Final Word
Although investing in real estate is a good option for new investors, but one should not forget to consider the rewards and risks of owning a rental property. One will be responsible for handling tenant’s complaints, fixing repair issues, handling evictions, etc. If you are ready to take such responsibilities and think you can handle them proficiently then start gearing up for investing in your first rental property.
But, keep your expectations realistic. Just like any other investment, rental property is also not going to produce a large amount check every month. You will have to keep patience. And investing in the wrong property could be a catastrophic mistake. If you are unsure, rent out your own house for a few months to check whether you can handle this and be a good landlord or not.