Purchasing investment rental properties with high bank interest rates is difficult but a great way to increase your rental income and build wealth over time. Having the right strategy and knowledge is key to making the most of your investment. Here are some tips to help you successfully purchase investment rental properties.
1. Do Your Research: Before you even begin your search for investment rental properties, it’s important to do your research. Make sure that you are familiar with the area, its economic indicators, and any other factors that may affect the value of the property. Additionally, research the different types of mortgages available to you and their interest rates. One of the best resources to jump start your research is to partner with a Realtor in the area you’re looking who understands investment properties. They can be a resource to help you fill in the numbers on your model as far as what you can get for rent, utility expenses, and who you can use for property management and maintenance.
2. Get Pre-Approved: Getting preapproved for a mortgage will give you an idea of how much you afford to spend on an investment property. This will also help you to narrow down your search since you will have an idea of the price range you can afford. Make sure to work with a bank that will not only help you reach your immediate goals, but one that understands where you want to be in 3, 4, 10, and 20 years.
3. Look for Deals: When you’re looking for investment rental properties it’s important to take advantage of any deals that may be available. Look for foreclosures and other properties that may be discounted due to their condition and other factors. Additionally, try to find properties on websites like Crexi, Loopnet and even Craigslist/Facebook.
4. Analyze: Run your analysis with conservative numbers. We always run ours with a 5-10% vacancy rate and maintenance expenses anywhere from 5%-20% depending on the property. We've learned that you can NEVER underestimate your maintenance costs, it always surprises us! The keys to making a property perform are to keep vacancies minimized and keeping hold of your maintenance expenses.
We manage properties in Waterloo, Cedar Falls and Cedar Rapids, and there are always purchases to be made that can help you reach your goals, sometimes you just need to look a little harder than normal!