Did you know that about 90 percent of millionaires made at least part of their fortune with real estate? Thus, it is not surprising to see more and more people looking for opportunities to make passive income on rental properties or flipping houses. 

Of course, many individuals feel reluctant to invest in property, fearing losing money or having little time to manage it. That’s why in this post, we will consider how to buy an investment property that will give you returns on your investment in no time without the hassle of dealing with tenants! So, keep reading to learn more!

Learn to Evaluate Investment Properties

Whether you plan on renting a property on a short or long term basis, there are several factors to consider, including:

• Neighborhood safety and the vacancy rate
• Job growth
• Trends in area rent prices
• Neighborhood home value
• Nearby establishments and schools
• Property taxes

Thinking about these elements beforehand will help you find a home with lasting property value and make the most rental income possible. 

Of course, even if a home is in an excellent neighborhood, you’ll need to decide whether you are willing to do repairs on a fixer-upper. However, as a first-time investment property buyer, you may prefer a turn-key home that is ready to start renting since it poses less risk. 

Calculate Your Return on Investment 

Before you purchase the first fixer-upper in your price range, you should calculate how much passive income you’ll be able to make off of it. To do so, you’ll need to estimate the annual cost of operating the property, including:

• Repairs
• Taxes
• Property management fees
• Insurance

Then, you should deduct this number from the annual rental income you expect to make from the property. The result is your estimated yearly cash flow. 

Of course, you’ll have a considerable amount of upfront expenses, such as the down payment and the cost of any repairs, so it may take a few years before you’re making income from the property. 

Hire a Property Manager

Whether you plan on owning several investment properties or just one, being a landlord means looking for responsible tenants, collecting rent, and addressing repairs. Moreover, you’ll need to familiarize yourself and comply with local landlord-tenant laws. 

While all of this may seem like too much of a hassle, it doesn’t have to be! Many landlords decide to hire licensed property managers, such as McSherry Property Management, to do these tasks for them. Delegating this responsibility gives them more time to look for other investment opportunities or enjoy hobbies while making a passive income. 

Now You Know How to Buy an Investment Property!

After reading this post, you know the basics of how to buy an investment property. But, of course, there is so much to consider, including the local market and laws. So, be sure to research specific information for investing in properties in your city! 

If you would like to learn more about making smart investments, check out more of our content relating to finances and real estate!