Consider maintenance costs in time and money
As Kelman pointed out, home improvement know-how is a valuable skill when it comes to investment property. Maintenance can be both time consuming and expensive. If you don’t think you have the time, you will probably need to hire a property manager, says certified financial planner Jeffrey Levine, director of planning at Buckingham Wealth Partners.
“Most people who have owned a home know how long it takes to maintain it,” he wrote. “Ditto for rentals!”
Choosing the right tenant is another way to reduce maintenance costs, says Marguerita Cheng, certified financial planner and CEO of Blue Ocean Global Wealth. “You don’t want just any tenant,” she wrote. “You want a tenant who pays their rent on time and treats your property with respect. “
“If you want to be an investor, you have to understand the math,” tweeted mortgage originator Jennifer Beeston.
There are a number of questions you should ask yourself before embarking on a real estate investment, she explains. “How much are utilities going to cost?” Does the property you are buying have deferred maintenance? How much is it going to cost you to make this house rentable? If you have a tenant who doesn’t pay for a month, do you have the reserves? Do you have insurance in place to handle this? “
Video by Helen Zhao
Home insurance and property taxes are additional numbers to consider.
Beeston also suggests using a real estate agent who specializes in investment property. They can collapse “if it’s really about cash flow, and that’s the key,” she says. “It’s an investment, so you have to put on that business hat. “
‘Start with the end in mind’
Having a game plan is essential, says Seth Williams, founder of REtipster.
“Start with the end in mind,” he wrote. “Understand what your long-term goals are and how each investment property fits into your roadmap. Even the best investment properties won’t make sense to all investors. Determine where you are trying to go and stick to it. the plan.”
During another part of the chat, Williams pointed out that having a game plan helps you set a hard limit on how much you’re willing to pay for investment property, in a market where the wars are over. auctions are more common. “Rental properties are a business decision, not an emotional decision,” he wrote. “If the deal doesn’t have a positive cash flow with your bid price, move on to another property.”