There’s no point lying; it’s near enough impossible to invest in property without substantial money behind you. Any enterprise requires down payments, but it’s hard to imagine an industry which deals in such large amounts of money so early on. Hence why many people never consider rental property as a possible career avenue.
We’re not here to tell you-you can make this work without funds behind you. That’s not realistic. But, we are here to tell you that rental property may well be your key to the real estate world. However, you manage to buy your first property, renting it out could more than pay your way to the next step in the industry.
If that sounds like a good deal, you have one crucial question to ask yourself. Should you save up to buy outright, or take out a mortgage instead? In an ideal world, you would, of course, save up to buy. But, the reality is that could take a good few years. A mortgage, however, could see you jumping on the real estate bandwagon much sooner. Or, at least, it could if you do things right. Understandably, there are a few things you’d need to consider before this was a workable option. And, we’re going to look at some of them here.
Is Rental Property Right For You?
How much rent could you get?
Before you approach a mortgage lender, you need to do market research. That means getting a rough idea of how large a mortgage you’d need. And also how much rent you could ask for the rental property. After all, each of these factors into how long it would take to repay your mortgage. And, that dictates how long it’d take to get fully established in the real estate world.
What type of mortgage should you choose?
It’s also crucial you consider your mortgage options before going ahead here. For instance, an adjustable rate mortgage wouldn’t suit you. With one of these, it’d be impossible to predict how long you’d be paying. Instead, something like a fixed-rate mortgage would allow you to at least judge when you’ll be able to clear that debt. And, given that timelines are a crucial part of business success, that could make a huge difference. It could also ensure you don’t end up paying over the odds.
Is the property in a good enough condition to pull a profit?
It’s also worth considering the condition of the property you’re buying. If it’s in a state of disrepair, there’s every chance you’ll need to pay for upgrades and fixes along the way. And, if you aren’t careful, they could get pretty pricey. Before you know, you’ll be spending all rental income on the property itself, and thus failing to make your mortgage payments. That’s bad news for obvious reasons. So, make sure that your rental property purchase is at least functional and unlikely to cost you too much in repairs. Then, and only then, can you rest easy that all your rent will contribute to clearing your debt.
Have you considered rental property as a means to make an income? Or do you own rental property? Tell me about it in the comments below.