How to Invest in Rental Properties


If you’re thinking about diving into the world of real estate investing for rental properties, there are some important tips to consider first. Desrochers Realty Group visited Twin Cities Live to provide guidance on what you need to know prior to committing to a rental property purchase. As experienced rental property owners ourselves, we’ve learned some of the lessons the hard way and can steer you away from the same mistakes we have made.

Tip 1: Get pre-approved before you do anything.

You need at least 20-25% down when you buy a rental investment, which comes as a surprise oftentimes to people. Because you are purchasing a second home, this is a pre-requisite for lender approval and this is a big difference from buying your primary residence. Also know that interest rates will be higher on this second property – however in today’s real estate climate, they are still a great value.

Tip 2: Consider the area and qualities of the home

Once you are ready with your financing, you need to think first and foremost about location. Is it close to jobs, public transportation and amenities? Is the area super popular and where renters will want to live? Renters want an area convenient to them and their lifestyle.

Tip 3: Do your due diligence to make sure you can actually rent the property

Townhomes and condos oftentimes have associations, and they do not all allow properties to be rented. However, if the association does allow rentals there can be great benefits like covering the exterior and hazard insurance. Due your research and make sure to understand all rules and benefits.

Tip 4: Don’t attempt to find a rental property on your own

You really want to work with a realtor that has experience working with rental properties and even owning rental properties. You want to be working with someone that can advise you along the way with proven experience. An expert realtor can point out all the stuff that can come up in two to five years that you will need to factor into your finances.

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