Owning a rental property can be a daunting and pricey task. But, with a planned approach, you can get your first Lehi rental property in a short time. Having a rental income to add to your income can be a benefit in helping you to realize your life goals. Below are the primary elements in finding and purchasing your first rental property.
Collect as much information as you can about the area you plan to invest in. Search for key features of the area that can entice tenants, such as a park, shopping, proximity to public transit, or a great view. You also need to read up on tax laws and mortgage rates to give you a reliable estimate as to how much you should budget for your future investment as well as cash required as down payment and mortgage costs for your first Lehi rental property.
There are various different options you can make use of when looking to finance. Rental property loans or finance options may be different from those available to owner-occupied home mortgages. Here are some different types of financing options you can try:
- Cash – use cash to buy a rental home
- Mortgage – pay a down payment and then monthly mortgage payments
Note: there are many types of mortgages; do your research to make certain the loan fits your budget and needs
- Portfolio lenders – access an adapted portfolio of mortgages available with flexible terms exclusive to property owners
- Federal Housing Administration (FHA) loans – although FHA loans are meant for those planning to reside on the property, there are some options available with FHA that permit FHA-financed homes to have more than 1 unit (up to 4); you can stay on the property and have a rental property unit using FHA
- 203K loans – this loan considers the cost of home repairs and improvements into the loan amount; this can be valuable when looking to renovate a property and rent it out
Find a Property
Work with a local real estate agent to know where there are properties available in your targeted area. Get a general idea of property specifications and how much you are ready to spend. Make sure to set limits and expectations when searching for a property. Once you find the best purchasing point, you can figure out your long-term profitability.
An important step not to be skipped in the process is to have a property assessment of the location to determine if it is livable as well as what needs to be repaired or changed to make the home rent ready. Before buying, you can request for a Real Property Management office to assess the property to provide advice concerning its rentability and to give suggestions for upgrades and so on. Also, they can recommend an expert home and pest inspector if needed. In this crucial step, you will be able to get an estimate regarding the property’s current and potential performance.