Investment in Main Line Real Estate, So you want to buy a rental property? Where do I start and how do I start?
Here are some tips! Buying a rental property can be a bit daunting. Believe me, I know. I have been a real estate agent for years and have assisted clients investing in properties. Whether you are flipping or buy and holding or renting, I have worked with various lending arrangements and investments. The buy and holds, or rental properties, for me, have given me the most satisfaction, especially in the 2021 market where so many Main Line sellers are taking advantage of the market and selling their home but are not wanting to buy again. The rental market is key. Here are things you should consider when looking at rental properties.
Location, you want to determine, are you buying local or out of state?
Price range – a good rule of thumb is the 1% rule where the rental income is about one percent of the purchase price. For example and to make numbers easy-if the purchase price is $150000, then your rent should be approximately $1500 a month.
How to find market rental rates? Go surfing online, pull up the going rental prices in the area your looking for for the type of property you’re looking for 2bd/2ba, 3bd/2ba etc. – you can do this through a sites like rentometer.com. A seasoned realtor can help you as well.
Run your numbers to determine your cash flow. Take the rental income of the property and subtract your expenses. Such as mortgage or debt service, taxes and insurance, and utilities. Don’t forget your long-term expense variables such as your Capital Expenditures, maintenance, vacancy rate, and don’t forget about property management. Super important.
A simple first step is to assume a 50% rule – meaning approximately 50% of the income will go immediately towards expenses.
The 1% rule and 50% rule are just super quick baselines to help determine quickly if you have a good rental prospect property.
If all of this has been confusing it is important that you work with an experienced agent who understands where you are and where you are heading.
I hope this has been Helpful, and as always I’m here for any questions you may have. Take a look at the rest of my real estate resources in the links below and follow along on my Youtube Channel at Kimmy Rolph Real Estate. Kimmy Rolph Sells The Main Line and Local Areas.