Purchasing a Palmdale single-family rental property for the first time be an incredible experience. But, like with all investments, there are several risks involved. To guarantee that your first investment property purchase in Palmdale becomes as prosperous as you hope it will be, there are several factors you must consider before you purchase. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property will be your primary focus? How will you finance your purchase? In what follows, we will examine these issues and other crucial information you’ll need to know to make purchasing your first rental property a rewarding experience.
Define Your End Goal
When owning your first single-family rental home, one of the first actions to take is to set clearly defined end goals. Before you begin your property search, you should determine what qualities you are seeking in your investment property. For instance, you may be searching for properties in a particular area with a specific number of bedrooms or minimum square footage. You can also aim at a specific renter demographic, such as college students or retirees. Understanding the details enables you to refine your search criteria and locate potential properties faster.
Prepare Your Finances
In addition to determining what qualities you are seeking in a property, it is important to prepare financially before you acquire an investment property. Industry experts recommend paying down personal debt and saving for a down payment before commencing your property search. Reduced personal debt can help you to qualify for more affordable loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Organizing to finance in advance is another critical step, but be cautious of high-interest loans or mortgage products that seem too good to be true. By prequalifying with a dependable mortgage lender, you will be prepared to capitalize on investment opportunities when they arise. By prioritizing financial readiness, you can acquire the rental property with greater assurance when the moment arrives.
Crunch the Numbers
After taking these essential preliminary steps, the search for the perfect property begins. A key consideration during your search is that you should run a series of numbers on each possible property, including your margins, operating expenses, and expected return. This is where a lot of new investors make fatal blunders.
New investors need to keep in mind to include all the expenses related to purchasing and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin of 10% and a 6% return in your first year means you have a profitable investment.
It is worth remembering that an investment property is just that, an investment. Getting attached to a specific property or allowing emotions to affect your decisions is not an excellent idea. Moreover, the property you buy is not necessarily one you would ever live in yourself. Industry experts urge you to choose low-cost properties in high-demand areas for your first investment. However, avoid fixer-uppers unless you are a highly skilled home remodeling expert or know a reliable contractor who will undertake the work for less than the going rate. Your first single-family rental property should be considered the first step toward a long and profitable investment career rather than the end goal. So, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
In the end, don’t forget that acquiring a rental property is just the first step. To secure the profitability of your investment, you need a proactive management strategy. This is where engaging with a Palmdale property management company might be favorable. As local market experts, property managers can help you find off-market investment properties, analyze market conditions, set rental rates, and much more. As more savvy investors will attest, the ideal property management company is a helpful partner for lucrative rental property investing.
If you have discovered the right investment property, be sure to choose the best Palmdale property management team. Contact Real Property Management Traditions at 661-266-1400 now.
Originally Published on March 13, 2020
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