Buying your first Santa Rosa investment property requires a lot of preparation. When you’re ready to invest, make sure you’re surrounded by experts and good advice.
We’re here to provide some of that advice today. The real estate market is in a unique place right now, and things change quickly. That means there are a few challenges new investors are likely to encounter, but also a lot of opportunities.
Consider the following five points, and you’ll avoid some of the most common mistakes first-time investors make.
1. Establish Your Unique Investment Goals
Setting investment goals is an important first step in buying your first rental home.
Write down the reasons you’re investing and what you’re hoping to accomplish. Make a one-year plan, a five-year plan, and a total plan that even outlines how you might get out of the investment down the road. Having an exit strategy before you even begin might seem silly, but it’s a good idea. These investment goals should drive every decision you make. They will keep you on track.
2. Remember that Investment Properties are Your Business
A lot of first-time investors tend to get emotional about the homes they’re buying. Remember that you’re not going to live in this property yourself. You don’t have to love it, and you don’t have to spend a lot of money renovating a home that would appeal to you personally.
Think like a tenant, and invest in a property that will earn you consistent rental income and appreciate in value. This is an income-producing property, not your own personal dream home. This is a business. Make decisions with your investment goals at the forefront of what you’re thinking.
3. Find a Great Santa Rosa Property Manager
Work with a professional Santa Rosa property management company before you buy an investment property. You need an expert who knows the local market and understands the property management industry. Find a company that can accurately price the home, market it, and screen for highly qualified tenants.
Look for a management company that has good relationships with local vendors and has a reputation for helping owners earn more and spend less on their investments. A local management company will also understand all the laws, requirements, and best practices in Santa Rosa real estate and management.
4. Make Sure the Numbers Add Up
Don’t get too excited and make an offer without really crunching the numbers. Do your math. Several financials are far more important than the property’s purchase price. For example, you’ll have to know how you’re paying for the investment. What kind of leverage are you going to have and how much cash are you able to put down?
Measure your expected rental income against your anticipated expenses. You’ll need to factor in the mortgage payment, insurance, and taxes. But, you’ll also want to budget for maintenance and vacancy. Don’t forget to include your property management fees and other professional services.
5. Avoid Investing in the Wrong Santa Rosa Investment Property
Make sure you’re buying a home that’s going to be attractive to the tenants you will hopefully place there. You don’t have to be an expert in real estate to understand the importance of location. Location is important, and so is property condition.
Homes in desirable neighborhoods and near good schools, commuter routes, parks, and recreation are going to rent for more than homes in remote or busy areas. The location of a rental property also has an impact on how quickly you’ll be able to rent out your property and the types of tenants you’ll attract.
The wrong property might be a fixer-upper. It could be in a remote location with a terrible commute for most tenants. Stay away from those. Trust your goals and your agent and property manager.
These five tips will hopefully get you started, but we have a lot more to tell you. Please contact us at Prestige Real Estate & Property Management. We’re your property management experts in Sonoma County, including Santa Rosa, Windsor, Sebastopol, Petaluma, and Rohnert Park.