More and more people are choosing to buy a rental property before purchasing a single-family home for themselves. Learn more about how to do it as well as the benefits:
Nowhere does it say that you need to do things in a certain order. You’re not required to get married, buy a house, and then think about investment property. Schooled real estate people have known for decades and now, more people are realizing a more financially feasible way of affording the longterm dream home or trophy home. By buying a rental property first, you can begin building wealth instead of waiting until you are middle-aged.
Why is this a better agenda? Read on.
You Have Energy
Owning a rental property can be a lot of work. While the goal is to have things run simply, it isn’t always the case. Maintenance and the needs of your tenants are predictable and unpredictable. Advertising for renters and taking time to check references, etc also take time. Everyday, you will need to be up to the task.
You Have Time
You may not have the demand of a family or high-pressure job. Younger investors typically have fewer demands on their time, giving more time to find and manage investment properties. As you get older, life typically hands you more things that will occupy your time, leaving you with less time to focus on your real estate investments.
You Build Equity
Equity is the amount of a property you own. It’s the percentage you have paid toward the house. You can calculate your equity by deducting your loan balance from the value of the home. By having equity in your investment properties, will help you build momentum in your investing strategies over time.
Your Portfolio Will Grow Quickly
By starting young, you will have the capital and equity to create a substantial portfolio by the time you decide to settle down, buy a home you want, and possibly have a family. Setting yourself up ahead of time will make all the other things life throws at you easier to handle. Nobody wants to be middle-aged and wondering how they are going to pay their bills. Setting up a real estate portfolio early will ensure you won’t have to worry about ownership costs down the road.
You’ll Be One Step Ahead
While many people tend to wait to invest in real estate, you can start right away. You will learn more, gain more experience, and be better at dealing with competition. This will give you a leg up on your contemporaries who decide to get into the real estate game a bit later. It is never too early to begin your investment career! Fast Cash Homes MN can help answer any questions you have about getting started.
How To Start
Many people opt to use an FHA loan in order to get their first property. This type of loan requires a much smaller down payment than a conventional loan and can be used on properties with up to four units. The catch is that you need to live in one of the units for the first couple of years. That said, by renting the other units out, you will be able to cover your mortgage and likely many of your other living expenses too. You can even rent the units out to friends or family and create a fun environment for all to live.