Are you trying to secure your financial future? It might be time to become a real estate investor in San Diego. The rental market has never been hotter, so this is the perfect time to take the plunge.
But how do you become a real estate investor anyway? Is it as simple as buying a home and bringing in tenants? We're here to talk about it.
Keep reading for our quick guide on real estate investing for beginners.
Choose Your Rental Property Type and Location
Becoming a San Diego real estate investor requires a bit of research when you're first getting started. You need to make sure that you choose a property that allows you to turn a profit, and that's not as easy as it seems.
Are you going to buy a commercial property or a residential property? If it's residential, do you want a multi-family property (like an apartment complex or duplex), or a single-family property?
Look around at various neighborhoods in San Diego to determine which ones are likely to experience growth. Don't rely on flourishing neighborhoods exclusively. Consider what might make a less popular neighborhood "up-and-coming."
Get Your Finances in Order
You're going to want to have enough money to put down at least a 20% down payment on your new property, if not more. Remember that interest rates on mortgages for rental properties may be higher than they would be for primary residences.
Alongside that initial money, you're going to want to have enough money in the bank to pay for at least two to three months of mortgage payments. While you'll be using rental income for your mortgage payments, having this money in the bank makes you more reliable to lenders.
Remember that there are other costs associated with being a property investor. You have to handle maintenance, emergency repairs, insurance, and more. Set aside about 30% of your rental income for these costs when you start getting tenants.
Learn Local Rules and Laws
If you don't want to end up in hot water, it's important that you have a grasp of local (and federal) housing rules and regulations. You want to avoid making any serious mistakes.
Learn about the eviction process (though ideally, you'll never need it), security deposits, rent limits, necessary insurance coverage, and the laws regarding housing discrimination.
Hire a Property Manager
If the legalese behind becoming a property manager is overwhelming, it's in your best interest to hire a property manager. Not only do experienced property managers know the ins and outs of housing laws, but they also provide helpful services that will make your property investment as passive as possible.
They can help you with tenant screening, writing effective leases, tenant communication, marketing, and more.
You're Ready to Become a Real Estate Investor
Becoming a real estate investor is complicated, but this brief list of real estate investing tips can help you get started. You're on your way to one of the smartest investments you'll ever make.
Are you in need of a property management company in San Diego? We want to talk to you! Contact us so we can start working together today.
