If you’re looking for ways to create a solid stream of passive income that doesn’t rely on “trading time for money”, then one worth checking out is renting properties. The key is knowing which rental properties to invest in, though – and which to stay away from. Today we’re going to be going a deep-drive into where, when, and how to buy rentals!
1 Know where the big boys are buying: AZ, CO, FL, GA, ID, IL, IN, TX MS, NC, NV, TN
go to their sites and search as a buyer. Cities where they are especially active:
Atlanta, Charlotte, Dallas, Houston, Indianapolis, Jacksonville, Vegas, Phoenix, Nashville, Orlando
2 Who’s buying? Small investors, big investment groups.
3 What are they buying? Are they getting ‘deals’? 2000 square foot homes, rending from $1500 to $2000 per month. Not distressed, not rehabs. Paying retail and over.
4 How do I become comfortable buying, owning, managing property outside of my own market?
*Agent relationships to check pricing and write offers on correct legal docs, but only pay a transaction fee, with your referral fee being roughly 3% back to you, helping with your down payment.
*AHS Home Warranty or similar included.
*Avoid big HOA fees if possible.
*Manage yourself using Buildium.com or hire a property manager.
5 Get yourself pre-approved for the purchase of rental properties.
*20% down minimum and 25% down will usually score you a better interest rate.
*Consider paying cash, depending on your financial liquidity and your goals.
*Credit score of 740 for the best rates. Lower than that you pay points and fees to get a decent rate, but rates are low so this is not usually a detractor to your ROI assuming you have a decent down payment and the purchase price isn’t crazy.
*Owner financing can be a great option as well. You can be more creative in the financing. Just record everything legally and know when you have to refinance or pay it off.
*Get a strong and specific lender letter in case you have to compete for property you really want!