Real estate properties are one of those investments that span the test of time. The market is only going up and we’ve collectively learned a lot from the housing crash of 2008.
So if you can invest in it, buying a rental property can be a great idea for your family. But how do you do that? We’re walking you through the how-to process, below.
1. Meet Up with Your Wealth Planning Professional
When you’re looking into a rental property, you need to treat it like any other investment. Just like you wouldn’t buy a large chunk of stocks/bonds without asking your planning professional what they think, the same is true with your rental property.
In fact, with the prices of real estate being what they are, it’s arguably more important to work with your planner on opening a rental property.
They can help you figure out the right way to buy, how you’re going to file it tax-wise, and make sure you don’t exceed your budget.
2. Work with an Investment Attorney
After you’ve decided what you can afford with your planning professional, you’ll need to speak to a real estate investment attorney. Not only can they help you find properties, but they’ll be able to write it into your will and file all the paperwork that will help you on your journey to becoming a landlord.
Additionally, once you’ve bought your property, they can help you write your lease and be the touchpoint for any legal issues down the road.
3. Hire a Property Management Company
If you live in the same city as your rental, you may be able to forgo this step, but if you’re more than two hours away, it’s worth the cost of a property management company.
Many new property owners don’t want to spend the cash on a management company, but it’s worth breaking even for a year or so, at least until you understand what being a landlord is like.
Finding a property management company that is super transparent will help you learn the ropes if you decide you want to DIY in the future.
4. Get the Right Kinds of Insurance
When you’re a landlord, you’ll need landlord insurance. It’s like having home insurance and it will complement your renter’s rental insurance, which should be a requirement in your lease.
Talk to your insurance agent to make sure you get the proper amount of coverage.
5. Find Your Renters
Finally, you’ll need to find people to live in your rental property. You can list on a few different sites, like Zillow or Redfin, or work with a real estate company that works with rentals.
Buying a Rental Property
The costs of a rental property aren’t just the mortgage and the management. There are costs associated with annual taxes, insurance, and hourly rates for your attorneys. Make sure you’re adding those into your budget when you’re buying a rental property.
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