Investment Properties Answers

Wednesday, June 10th, 2020

What to know if you’re thinking of buying an investment property of your own.

Location: The neighborhood should positively impact your home’s value and attract tenants or tourists. Make sure the property can generate enough rent income to comfortably cover your mortgage, plus property taxes, repairs, and HOA fees.

Down payment: Investment properties require a higher down payment if they’re not owner-occupied. It’s typically a 20% minimum, but it doesn’t hurt to put 30% down if possible.

Insurance: Rental property insurance or landlord insurance covers property damage, lost rental income and protects against liability. A business owner’s policy is common with vacation rentals, since you’re basically running a mini hotel.

Finding tenants: 

  1. Run a credit check
  2. Verify income
  3. Do a background check
  4. Require renters insurance
  5. Request references
  6. Consider a property manager to find and work with tenants.


Reasons to Invest in Rental Property

Investment properties come with several benefits. Depending on your situation, here are a few may enjoy.

  1. Increase your wealth as the property value rises over time
  2. Earn extra income from rental payments
  3. Get certain tax deductions depending on your situation
  4. Your tenants rent helps cover the mortgage
  5. Diversify your investment portfolio
  6. A guaranteed vacation spot when your vacation rental is vacant