In the current real estate climate, people who can afford to own a home may wish to go one step further and purchase a second property solely as an investment. This means living in their first home, but consistently renting out the second—ideally for a profit and ultimately to sell it later on for a greater value.
As home tend to appreciate steadily, save for real estate crashes every so often, an investment property is a relatively surefire way to earn money over time. However, this will also require some patience. In the meantime, if it seem too difficult to afford two properties at once, there are ways around this.
Without gouging renters with unfair prices, explore comparable properties in the same general vicinity are listed at. Ensure you are profiting by at least setting your rental price higher than what your combined expenses are for your mortgage, utilities, and maintenance fees. If similar places in close proximity are not nearly as high, this is likely not the right property to attempt to rent out.
Choosing quality finishing touches for your investment property that look good, but wear well and are not the highest end will make it easier to earn back the money you put into it. Most rental units are not furnished, but smaller touches like light fixtures and appliances can make a difference to the look and feel of a home. You also want to ensure renters will not need to call you at all hours of the night because the washing machine you purchased off the back of a truck isn’t working.
Judge the market
Ultimately, the success of an investment property will depend on the nature of the real estate market. If there is a crash, you will be hard-pressed to find renters who can afford—or are willing to pay—high prices. Monitor the circumstances just as closely as you perform security checks on your prospective renters. Further, choosing a mortgage that allows you some flexibility can help make an investment property more affordable and less risky.