Purchasing Your First Rental Home and How to Make Good Profit Off Of it
If you plan on diversifying your holdings beyond bonds and stocks, then you may be interested in buying an investment home. While many people dream of quick flips (purchasing and then renovating a home so you can sell it for a much better price) in reality renting is the best way to make money off a home.
“One does not discover new lands without consenting to lose sight of the shore for a very long time.” — Andre Gide
The Investment Definition is exactly that: to invest money for material result or profit. Sure, you can do that by selling your house, but if you want to make long term profit you’d better rent it.
Returns on your investment
While many companies on Wall Street aim for a five to seven percent ROI on their homes, if you’re an individual investor then you don’t need to worry about paying staff, which greatly reduces your expenses. As a result, it’s often recommended that you aim for a minimum ten percent ROI. How can you achieve that goal? Well, it’s essential that you consider targeting properties in a neighborhood you’re familiar with where there’s also a good demand for rentals.
Know why you’re buying
If Advice About Purchasing Your First Rental Home is what you’re looking for, then one of the first questions you should ask yourself is why you want to buy a certain property. As a first time investor, it may take you quite a bit of time until you learn the ropes and this means you need to be prepared for a lot of work. To avoid getting confused, make sure you know exactly why you’re buying your first rental property and what you’re planning on doing with it. It’s not a pleasant feeling to buy a home and then realize you’re actually more interested in stocks or bonds.
Buying your rental home
The Investment Purchasing Procedure is rather simple to understand, but you do need to be careful. First of all, you need to do your homework and make sure the location of your property is a good one. While the asking price may be a good one, it’s best to always negotiate. You’ll be surprised of how much money you can save this way. When you agree on a price with the seller, you’ll get to sign a Preliminary Contract and make a 10 percent deposit for the property. All the paperwork will be handled by the lawyer and the notary public and many papers do require your signature. After you bought it, don’t forget to insure it.
So at the end of the day, Should I buy an Investment Property or Rental Home? Well, it all depends on your goals. If you want to flip the house and sell it for a higher price, then go for it. But renovating and renting is generally a better option, since this offers you the chance to make a long term profit.