Ready to Buy Your First Investment Property?
Buying your first investment property is an exciting moment. However, it can also be tricky waters to navigate. If you want to make sure you get it right, here are some tips from Averett & Associates that can help.
Reduce Your Risk
When people buy their first investment property, they may assume that making the purchase in their own name is wise. However, that can put you at significant risk.
If you want to protect yourself and your personal assets from litigation, setting up an LLC is a smart move. It lets you separate your personal and professional lives. Plus, it’s fairly simple. While you can certainly hire a lawyer, you may be able to use a formation service instead, allowing you to save some money along the way. In Utah state, LLC registration can be done by Zenbusiness.com.
Don’t Overlook Location
Most people are familiar with the phrase, “location, location, location.” It’s been in use since at least 1926 and is commonly touted by anyone involved in real estate when they are discussing purchase priorities. In fact, some consider location the most important factor in the buying equation.
The main reason location is so vital is that you can’t just pick up a property and move it. Being in a good neighborhood can help you find renters faster, increase the odds that the property’s value will rise, and much more. As a result, you want to make sure location is a factor when you look for properties, potentially above all else.
Find the Right Features
In the United States, there are around 44.1 million renter households. While they won’t all have the same needs, certain features are often broadly favored. For example, open floor plans are usually preferred. Many also appreciate stainless steel appliances.
If the rental is in a city, reserved parking spots are commonly a top priority for renters. Washers and dryers in the unit (or, at least, hookups) make properties more attractive. The same goes for dishwashers.
In the aftermath of COVID-19, home offices are increasingly valued by renters. Overall, 46 percent of renters say that home office space is somewhat or very important, so you want to factor that in when exploring properties.
Talk to a Tax Professional
Owning an investment property impacts your taxes, potentially dramatically. Before you purchase an investment property, speak with a tax professional.
Averett & Associates can review the tax implications that come with the purchase, as well as any savings that might be available. That way, you’ll know what to expect. Plus, you’ll be able to make a more informed buying decision, ensuring you don’t get caught in a deal that comes with more strings than you’d like.
Figure Out Property Management
Before you buy, you may want to work out the property management details. Usually, you can either operate as a landlord, managing the property yourself, or secure services from a property manager.
Which option is right for you depends on a few factors. If you’re only going to have a few properties in the end, live in the local area, and don’t mind being the go-to person for all issues, being a landlord may work. With that approach, you commit your time but don’t have to pay a property manager, potentially helping you come out ahead financially.
If that sounds like more work than you’d like to take on, or you plan on securing a large property portfolio, a property manager might be a better fit. You’ll have someone caring for your properties and tenant needs, allowing you to focus elsewhere.
Make the Purchase
Once you’ve handled the steps above, it’s time to make a purchase. Secure any funding you need, such as by getting preapproved for a mortgage under your LLC. Then, work with a real estate professional to simplify the buying process, ensuring it all runs smoothly. Finally, make sure you have Averett & Associates to navigate the tax and financial landscape. Call (801) 506-0606 for a consultation.
Image via Pexels
Katie Conroy of advicemine.com | 09/13/2021