Perhaps you're planning to take advantage of the historically low interest rates. Maybe you're going to down size and are going to use the equity in your home for an investment property. Maybe you realize that the economy in Northern Nevada shows no signs of slowing and you want to take advantage of the in demand housing market. Whatever your reason for wanting to purchase an investment property, nearly every neighborhood in the Reno-Sparks area has potential for the investor. Contact Sallan Real Estate for more information about purchasing an investment home.
Before you begin shopping for an investment home, here are seven things to consider:
1. Do your research. Find out what homes are renting for in the neighborhood you're looking in. Who are they typical renters? What amenities are they looking for? Make sure you know what to expect before you purchase. Your personal likes and dislikes will matter less than what will attract potential renters or home buyers.
2. Decide what type of rental you want. Do you want to rent out a single family home? Maybe a duplex? Do you want to rent exclusively for vacation rentals? Depending on the type of rental will dictate the type of property you should be looking for and they type and ease of financing. Work with a Realtor and a lender you trust to help guide you in these decisions.
3. Secure your down payment. Unlike your residence, mortgage insurance isn't available for rental properties so you'll need at least 20% down. Work with a mortgage lender you trust who can walk you through the process if you have any questions.
4. Make sure you're ready to commit. If you're planning to save money and manage your own rental property, make sure you're ready to handle minor handyman issues. Will you be able to take the occasional urgent call when something happens at your rental property? Will you be comfortable evicting a tenant if it comes to that? Managing a rental property can require a commitment of time and resources.
5. Calculate your margins. Decide how much home you can afford and what a realistic rental price will be. Make sure you add in property insurance, property taxes, upkeep and maintenance, HOA fees, and any utilities or services (pool maintenance, lawn maintenance, pest control, etc.) you may pay.
6. Calculate your operating expenses. If you hire a property management company, you must calculate those expenses into your monthly cost. In addition to ongoing monthly expenses, add a cushion for emergencies like replacing a water heater or dishwasher.
7. Be selective in location. Are you planning to rent out a home near UNR? A small bungalow in Southwest Reno? Your location will likely determine the kind of renter that is most likely to live in that neighborhood and will prefer different amenities.