Things to Look out for When Buying Your First Residential Property

Once managed properly, the purchase of your first residential property can become a ticket to long-term financial stability. This investment can be very beneficial because you can generate passive income, improve your entrepreneurial spirit, and enjoy many tax benefits through depreciation.

A residential property can improve the quality of your life, but only if you’re careful about buying. Impulsively buying your first residential property can result in financial stress and can become the reason why your life will take a turn for the worst. Also, the type of residential property you’ll buy can make or break your ability to make a profit in the long run.

With the number of residential properties available from wholesalers and home buyers, it’s important to look out for the following when buying:

1.  Seek Professional Services

Contrary to popular belief, buying your first residential property doesn’t only require you to scout for options and then choose the most affordable. For your investment to be fruitful and stress-free, you need to understand how the real estate market works and what kind of property best fits your resources and goals. Buying a cheap residential property that doesn’t help you achieve any of your goals can become useless in the long run.

If you want your property buying process to be easy and fast, seek professional help from a broker or letting agent. Cash home buyers, for example, work as a real estate wholesaler and can provide you a wide variety of options when it comes to residential properties. Working with professionals like them will make it very easy for you to narrow down your options as you won’t have to start from scratch or work all by yourself.

You can also ask help from other professionals if you want to know the best neighborhood in your city or state and how you can identify responsible renters. Paying for their services can be cost-effective as you’ll experience convenience and gain experience from their services.

2.  Suitability Of The Property To The Rental Market

A lot of people invest in residential properties and have them rented out in order to earn money. This setup can be a great source of passive income, especially if you have a large space to rent out. The more tenants your property can house, the more profit you’ll have every month. But before you can earn a stable income through your rental properties, it’s important that you understand how the local rental market works.

The trends and growth of the rental market in your area should be your deciding factor when choosing a residential property to invest in. Even if you’re planning to buy a residential property in an area with high rent rates, you still need to answer the following questions first:

  • How much can your potential tenants spend in a home?
  • What is the average value of residential properties in the area?
  • What is the condition of the economy in the area?

When you have answers to all of these questions, it’ll be easier for you to choose a residential property that suits the budget and needs of your target market. This information will also prevent you from making costly mistakes.

Buying first residential property

3.  Avoid A Fixer-Upper

You’ll have a lot of things on your plate once you decide to buy a residential property. Aside from carefully scouting for options and choosing one that suits your budget, you also have to regularly maintain the condition of the property. What good is your investment if its fixtures are broken or damaged? How can your tenants stay in your property if there is no water and electricity?

Regardless of how tempting it can be to buy a house at a cheap price and then flip into a rental property, don’t do it. Leaning towards this direction can usually lead to more stress and expenses because you’ll have to spend a lot of time and money for large scale home renovation projects. This can even delay your opportunity to earn because you won’t be able to house tenants once these renovation projects are on-going.

When buying your first residential property, it’s best if you look for a home that is priced way below the market value but only requires minor renovation projects. Aside from lesser stress, lesser home renovation projects can also mean lesser expenses.

4.  Pay All Of Your Personal Debts Before Buying

Not everyone can afford to buy a residential property. This purchase will significantly affect your financial health because you’ll have to spend thousands or even millions of dollars. Depending on the payment scheme you’ll choose to utilize when buying a residential property, you might even have to maintain a good credit score before you can qualify to apply for a loan for a residential property.

For you to spend the rest of your life paying for lifelong debts, it’s best if you pay all of your personal debts before buying a residential property. If you have unpaid medical bills or student loans, settle them first before you start looking for residential properties. If your children will soon attend college, consider rescheduling this purchase as college can be very expensive. This is especially true if you’ll have to send more than one child to a college or university.

If you’re confident that you can manage your expenses by paying your debts and buying a residential property simultaneously, see to it that you still have money to pay for emergencies and other basic needs. Buying a residential property and not having enough money to pay for other daily expenses can be very stressful as this can result in additional debts.

Knowledge Is Power

Buying your first residential property requires careful decision-making as this purchase can affect your life in more ways than one. A residential property can be a great investment, but making poor decisions with the type of property you’ll buy can result in lifelong debts.

To ensure that you’ll end up with a residential property that can help you achieve your financial goals, use this article as you’ll guide when choosing a property to invest in. The more you know, the easier it’ll be for you to choose a profitable residential property and minimize risk.

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