When people think of investing, images of shouting stock brokers and offices on Wall Street usually come to mind. But owning small stocks and shares in businesses is sometimes a good way to spread out your money and bring in extra capital. Another way to invest is buy purchasing property that you rent out to individuals or families. Buying small apartments or homes and offering them to renters provides you with another line of income and, if you do it right, could turn your investment on Main Street into something more lucrative than those investments on the east coast.
Getting started in property investment begins with watching prices in the home buyers’ market. When prices on homes are down and interest rates start dropping, it’s a good idea to make an offer. Find a home that has a somewhat low purchase price, and make as large a down-payment as possible to cut down on your interest payments. Be aware of what kind of renters you want; it’s a good idea to start with a small, single-family home in an area that attracts a couple or family. These will usually be the most financially stable and responsible tenants.
Purchase a property in an area in an urban or suburban area with low crime rates, and perhaps find one that is close to a good school. This is better than snatching up whatever property is listed at the lowest price, because if you don’t find renters, you won’t make any money on your investment. Location is critical—if you want to turn a profit on your property, find a place that is appealing to renters.
Knowing when to start investing in rental property takes more than knowing about home prices: you must be financially stable yourself so you can recover from a setback if one occurs. Take an inventory of your assets: do you have enough to cover an extra mortgage payment if your renter is out of work or moves suddenly? Think about maintenance costs and emergencies, like a broken air conditioning unit or a flooded basement. Find out about insurance, and be honest about your financial condition: are you in a position to cover unexpected costs?
If you want to start investing in rental property, take the steps to get there. While putting yourself in a position to purchase a small home, watch the housing market for a good opportunity. Save up for the investment, and do research long before you make an offer on a home. Remember, if you purchase a property that is unattractive to renters, all you have is an empty property that costs you money. Be prepared for any unexpected circumstances, and position yourself as best as you can to maximize your return.