MINT HILL, NC – The stock market isn’t stable, inflation is climbing, and even the U.S. dollar might not be a good place to keep money right now. All the economic turmoil going on right now might have you wondering if a rental property is a good investment.
The process seems simple. Buy a property, find a tenant, and get the mortgage payment covered, along with some cash flow. With property values rising and rents surging, you might think this is the time to invest in real estate.
However, you have to consider every angle before you jump in. There isn’t a one-size-fits-all yes or no answer to this question. Instead, there are factors to consider before you buy a rental property.
Before you jump in and become a landlord, let’s look at a few factors to consider.
Factors to Look at Before Investing in a Rental Property
1. Mortgage Rates are Rising
With interest rates going up, you have to factor in the mortgage rate you will get for your investment property. Of course, the expenses can be covered by the rent you charge, but if you have to charge higher rent, it could be harder to find good tenants.
2. Surprise Expenses
Rental properties will need maintenance and you will need to pay for taxes and insurance. If you want professional help managing the property, you will also need to pay for a property manager. Make sure you consider all expenses before you jump into rental property investment.
3. Can You Profit?
Of course, one of the main factors, whenever you buy an investment property, is whether or not you can turn a profit. Rental properties are usually viewed as long-term investments. They might provide some cash flow, but often, that cash flow is held in an account for emergencies, repairs, and maintenance.
Often, the profits you will gain from a rental property will come when you sell the property later on. Since you were collecting rent, you will have most, if not all, of the expenses associated with the property covered. Then, when you sell, it can lead to a nice profit, especially if the property value has gone up.
It’s also possible to profit as rental rates go up in your local market. Since your mortgage payment will likely stay the same, you might be able to increase cash flow as rent goes up each year.
4. Can you Afford the Down Payment?
While an investment property will allow you to get a mortgage, just like a primary residence, the down payment is often larger. You may need to put down 25% for a rental property mortgage. This can make it harder to enter into this type of investment if you don’t have enough cash for the down payment.
Buying real estate in Mint Hill as an investment might be a great option for you. However, it depends on the property you plan to buy and your overall plan and goals. Make sure you consider all the factors and use a good local real estate agent in Mint Hill if you plan to invest in a rental property.
I would love to be part of your journey when the time is right for you. If you ever have a real estate question or need, or know someone who does, trust that you can turn to me. I will help you make the right move! Anna Granger (704) 650-5707 | [email protected] | www.1stchoicepropertiesinc.com