General Real Estate, Real Estate Investing

How to Invest in Rental Properties

If you are considering making an investment in real estate for purposes of generating rental income, you are not alone. Millions of people each year invest in real estate to rent. With the recent downturn in the economy and the state of crisis the real estate industry is in, this actually is an ideal time for investors to invest in real estate.

Not only are the properties on sale for the lowest prices they have been in years, the interest rates on mortgages are incredibly low as well. As such, now is the absolute best time to find real property to invest in with the ultimate goal of renting the property out.

 

Before getting started, it is always good to know how you will be financing your purchase. Some investors pay for the property outright and others secure a mortgage from a bank. There are other financing options as well, but usually most investors stick with mortgages if they do need financing for their real estate. If you will be securing a mortgage, you want to make certain that your chosen bank will allow you to use the mortgage to purchase an investment property.

 

Once you know how you will be financing your purchase, the next step will be to determine where you want to purchase your investment property. With rentals, location is extremely crucial. You want to make sure you purchase a rental property in a desirable neighborhood. Rental properties in desirable neighborhoods are more in demand than those that are not. In addition, investors will be able to charge more for rental properties located in decent neighborhoods.

 

Once you have isolated an area where you wish to purchase an investment property, you want to make certain their are no zoning restrictions, rules, regulations or laws prohibiting you from doing so. In addition, certain types of financing are not available to investors who want to purchase with the goal of renting the property out. Quite often, banks require purchasers to live in the home they are purchasing and are restricting from renting the property out. There are exceptions to the rule and quite often even when something is restricted an investor may be able to get the mortgage company to agree. Talking with an attorney about your plans and options is always wise. This is especially true for people who want to purchase an investment property with the goal of renting it out.

 

After you have everything in place, the next step involves finding the perfect property that you would like to purchase and rent out. You can choose to find a property on your own or you can choose to work with a real estate agent. Real estate agents are a very good source when it comes to finding properties to invest in. Not only do real estate agents know about all the best areas, they also have inside information on new properties that are on the market as well. When working with a realtor you want to make sure that the Seller will be paying the real estate agent’s costs and not you. Some investors do not mind paying a real estate agent’s. If you secure the services of a real estate agent, you want to make sure that you have all the terms of that agreement in writing.

 

When you find an investment property that you are interested in you should try to determine if the property has a rental history. If it has been rented out, how long was it rented out and how much was it was rented for. By considering these factors, you will have a better idea on how much rental income your investment property will generate.

 

By taking the time to do the research, secure the proper financing and discuss your needs with a real estate agent, you will find the perfect investment property for you.