There are few accomplishments in this life that can make you feel as proud as purchasing your first piece of real estate. Doing it by the age of 35 is even better. But if you can actually purchase an investment property in Sacramento and become a landlord by the age of 35, I promise you will have the envy and respect of everyone around you. The reason for that is that becoming a landlord by the young (yes, 35 is young!) age of 35, is a very rare accomplishment. However, that doesn’t mean it can’t be done! With some careful planning and professional guidance, there is no reason why you can’t accomplish this impressive goal. Here’s how it’s done.
Consider Going For A Duplex You Can Live In
If you haven’t yet purchased a home for yourself, the idea of purchasing a rental property may not seem like as much fun or even as practical. That is totally understandable! It is for this reason why you may be better off investing in something like a duplex which would allow you to live in one unit while renting out the other to help cover the cost of the mortgage. This would also give you the opportunity to keep an eye on the property and proactively make any necessary improvements as you go so they don’t turn into major and costly renovations down the line. It also means that the tenants are far more likely to be respectful of the property since you will be right next door.
Write A Business Plan To Guide You
If you want to begin investing in real estate in this way it is so important that you take it seriously and treat it like an actual business. In fact, you may even want to consider opening an IRA and using any profits to begin funding it. But at the very least you need to write a formal business plan for your real estate investment portfolio in which you lay out things like your long and short term goals, your strategy for hitting those goals, and how you will operate the business. You can learn more about writing a business plan for real estate investments here. That way when you have times where you are left wondering what move to make next, you will have the business plan to guide you in the correct direction.
Get To Know The Financial Requirements
There are very different financial requirements when it comes to purchasing an investment property versus one that will serve as your primary residence. For example, there are different types of loan programs available and many of them will require a higher down payment than say an FHA mortgage which you might get on your first home for yourself. You can also explore working with a private lender instead of a bank but you need to do your homework to make sure you are not being sucked into a predatory loan that will severely damage you down the line.
Be Realistic About What You Need Vs. Want
When looking for the property that you want to serve as your first rental, you need to keep your expectations and requirements in check. Remember, if you’re renting it out your personal taste doesn’t matter. The name of the game here is profit so you need to look for a property that is:
- Well within your budget
- Meets the demands of the average renter for the area
- Can yield a stable rent rate that will cover the mortgage and then some
- Is in a desirable neighborhood for renters in that price range
Just because you may be obsessed with shiplap and quartz countertops doesn’t mean you need to have them in your rental if you won’t be living there and those features won’t bring you a return on your investment.
Don’t Be Afraid To Ask For Help
Becoming a landlord for the very first time is both exciting and intimidating. There is far more that goes into having a profitable rental property than buying it and sticking in some tenants! While you are in the process of searching for your rental, you should also be hunting for a Sacramento Property Manager that will be able to assist you in getting the property legally up to code, finding quality tenants that won’t trash the place (or worse), collecting rent, handling maintenance, and the long list of other responsibilities that go into making a rental profitable.
For more information about how Alpha Property Management can help you on your path to success with your first rental property, give us a call today.