There are a few things every aspiring landlord should know before diving into an investment. This is especially true for the first time buyer. Your hard earned cash is on the line, and will likely not make you enough money to quit your day job in the foreseeable future. That means maximizing your potential profit is critical. Here are a few tips to follow to make sure you're on the right track.
Take a drive around the neighborhood
When researching properties to buy, nothing beats a boots on the ground approach, and while it is important to go and make sure the property is up to standard, it's perhaps of greater long term importance to take a look at your business neighbors. Take a tour of the major roads nearby. Stores like Whole Foods or Publix, or starbucks can be a boon to the landlords in the surrounding neighborhoods.
Watch the days on market
This is actually a fairly common way to get a bird's eye view of the local real estate market. The DOM is an indicator of how long it takes to sell in a neighborhood, and by extension, a useful price fluctuation weathervane. As it starts to fall, look for rising prices in the near future.
Avoid fixer uppers
Avoid fixing anything. While it can be tempting to go for a rock bottom deal, put in some elbow grease and turn a distressed property into a cash cow, it's not for you. You want to make an investment that starts paying for itself right away, and dumping money into a property only to wait months to collect your first rent check doesn't add up.
It's not easy buying a rental property, but spend a little time learning, and make some smart decisions in the buying process, and you can tap into a valuable income stream with minimal headache.