Tips for Buying a Rental Property
It's quite an interesting time to buy or rent in Kitsap County right now. Inventory is currently low for buyers and renters, while demand remains high across the board. If you're looking to buy an investment property to expand your portfolio and generate additional income, now may be a good time to do so. Here are some helpful tips to keep in mind.
Choosing the Right Property
The most important thing about owning a rental property is making sure that it will be profitable. First, you want to put yourself in the shoes of a renter. What would you look for in a rental property? Amenities? Neighborhood? Safety? Common traits that successful rental properties share are being located in good neighborhoods with ample parking and proximity to schools, entertainment, and grocery stores. They might also be focused on proximity to gyms, restaurants, and public transit. Here in Kitsap County, many commuters want to be near the ferries to Seattle.
You may also want to look at neighborhoods with exciting development prospects. Purchasing a home in that type of area may prove profitable in the long run as that area's options expand over time.
Cost-Benefit Analysis and Taxes
Purchasing a rental property is a big commitment. As a matter of fact, it is a good idea to perform your own cost-benefit analysis to make sure that purchasing a rental property is a suitable investment. In this case, you want to keep in mind that buying a rental property requires a large down payment. Additional factors to think about are tax breaks, property taxes, and expected rental income.
Thankfully, there are alternative ways to finance your property while still getting the benefits of having a rental. For instance, you can split up the risk and down payment by finding partners. However, it is imperative that you vet your partners before agreeing to invest together. As with any partnership, you want to make sure you are working with someone you trust.
Fixer-Uppers
We’ve all heard stories about how people have flipped houses and sold them at a profit. Though it seems fun in concept, it takes an incredible amount of time, work, and expertise. Unless you are an experienced handyman, architect, and interior designer with a large home improvement budget, it is a good idea to avoid investing in a property that needs extensive work.
Being a Landlord vs. Using a Property Management Company
After purchasing a rental property, it is essential to think about who or how you will manage it. If you have a full-time job and a family to care for, you may not have much time to oversee it. Renters will need assistance with several things, from plumbing to electrical. They expect someone to be available whenever there is something that needs to be fixed. Routine maintenance is also the key to ensuring the property is in good condition from season to season, and from renter to renter. So if you don’t have the time or expertise to assist, it may be beneficial to use a property management company. Our property managers collectively have over 31 years of industry experience. From marketing your rental home to addressing tenants' concerns to finding the best tenants, using a property management company comes with many benefits.
While the prospect of purchasing a rental property is exciting, we know it's also quite a process. If you still have questions about buying an investment property, our Windermere real estate agents are happy to answer any questions you may have.
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