Today, it seems you always hear about how the value of homes is increasing and how it’s the best time to turn a house into an investment property. When deciding whether or not this investment is right for you, there are some things one might want to consider first. Here are five things to consider when purchasing an investment property.
Secure the Down Payment
The down payment can be costly, especially for an investment property. The down payment on the house may be anywhere from 15%-25%, with higher loan costs and higher interest rates.
Expected Rental Income
Tenants come and go, meaning your rental income also comes and goes. If one tenant has just moved out, it may be harder to get a new tenant immediately after. Your rent needs to be able to cover the mortgage, property taxes, insurance, and other expenses attached to the investment property.
Length of Owning the Property
When looking to generate a profit, real-estate may seem like a quick and easy way to make money. However, when purchasing a home as an investment property, it’s exactly that; an investment! You need to be sure you’re willing to own the property long enough to pay back the principal, interest, and other costs that come from having a home mortgage. Before purchasing a home as an investment property, be sure you’re committed to this long-term project.
Expenses of the Property
One problem many new property owners face when renting out their property is using all their funds to purchase the property, and having no other funds prepared in case any problems emerge in the house. Anything from an oven fire, broken AC unit, or wall damage can be a costly expense. On top of unexpected costs, property owners also have to consider property taxes on their investment.
Understanding the Risks
Although there are many rewards to having a home as an investment property, there are equally the same number of risks associated with having a home as an investment property. Some risks that come with an investment property, including:
- Problems with poor tenants
- Rental income may not cover the entirety of your mortgage payment
- You cannot sell your investment property if the market takes a dive or goes sour
- If you cannot find a tenant, you’re stuck with all the costs and expenses of your investment property
The more you know about purchasing an investment property, the better-educated decision you can make if this investment is right for you. If you’re set on buying an investment property, the next step is finding the best mortgage company to help you afford your new investment property! Ace Mortgage Loan Corporation has been serving the people of South Florida for over 20 years and is here to help you make this big purchase. With knowledgeable and experienced loan officers, you know you’re in trusted hands, to begin with, investment opportunity! To get started, call (954) 777-4774 to speak to a representative or visit Ace Mortgage Loan Corporation’s website at https://www.mortgagescoralsprings.com for additional information.