When you are a first-time property investor in West Richland, it is hard to know what type of rental property is a good fit. There are many different property types, and all of them have particular challenges and opportunities. For first-timers, experts typically recommend buying a single-family dwelling. But should you focus on foreclosures, older homes, or new construction? Since there are so many options available, it’s important to learn about each one before embarking on your real estate investing journey.
Experts often recommend that single-family homes are excellent for a first-time property investor. They tend to attract tenants that are more financially stable and want to stay in the home longer. That specific stability is important if you are first starting. But in particular, you also need to find a rental property that you can afford. That desire for a great bargain often leads new investors to consider buying a foreclosed home.
A foreclosed home is a property that has been reclaimed by the bank that holds the mortgage. Buying a property from a bank, rather than from a private owner, has a few advantages. Banks are often willing to negotiate a little more on the price for buyers who can close right away. Another benefit is that you do not have to check whether the property has a clean title or not. The bank will clear any liens or back taxes owed for you. While the bidding and buying process will be different for a foreclosure, you may still qualify for a range of mortgage options that include both VA and FHA loans.
Certainly, buying foreclosed properties does possess a few drawbacks as well. One of the biggest problems for buyers is that foreclosed properties tend to be sold as-is. The property might have been sitting empty for some time, allowing maintenance problems to develop or worsen. Also, the previous owners may have stripped or damaged the house on their way out. It is not uncommon for owners to leave the property in very bad shape, knowing the buyer will bear the cost of renovations. It’s not recommended to buy a foreclosed property unless you have enough cash on hand to fix it up.
If you’re looking at older homes, you may encounter similar issues. While many older homes have been updated and maintained, these will likely not be the best bargains. But it is important to avoid fixer-uppers unless you have cash for a contractor or the skills to do the work yourself. The lower-priced properties will often come with maintenance or repair issues, which can range from simple cosmetic elements to serious damage. Still, older homes do have many advantages. Buying a home in an established neighborhood can help you more easily calculate a competitive rental rate and even attract tenants who want a particular location or community.
On the other side, buying a brand new house to use as a rental is becoming more and more common for some reason. Most tenants might be willing to pay more to rent a house that no one else has lived in before. Besides, you can often have more say in the design and style of the property. Newer homes will require much less maintenance and repair and may have a lot of potentials to increase in value fairly quickly. Still and all, counting on appreciation is always a gamble. That is significantly true for new construction, where property values can be more difficult to determine. In some instances, you might need to hold onto the home longer to see any significant returns, and new construction is also located farther away from amenities, urban centers, and public transportation. This could discourage some tenants from renting the home.
With both pros and cons for each type of investment property, the one you ultimately choose is a matter of personal preference. Both older homes and new construction are always relatively easy to finance, with several different mortgage options you can choose. There are several financial resources available to investors for both property types. Yet, it is important to note that budgeting for every kind of home will be different due to the unique properties of each one. Finally, as a first-time property investor, it is important to know as much as you can about each particular type of property before moving forward with your investment.
When you purchase your new rental property, you’ll need someone to manage it. The West Richland property managers at Real Property Management Tri-Cities can handle everything from move-in to move-out. Contact us online or call us at 509-572-5440 for more information.
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