Purchasing your first rental property can help generate passive income for generations. Sooner or later, as a rental property owner, you can even benefit by relying on the appreciation of your asset.
However, you need some planning to buy your first rental property. Start with looking for the best bank for a home loan and its insurance. Consider benefits like the lowest interest rates and a home loan transfer facility. Then you can follow these 5 other tips.
Plan your Budget
Budget is the first thing to consider for any investment. The same applies to investing in a rental property. If you wish to take a house loan, then soon you have to make its down payment besides paying for the property taxes. You may also want home loan insurance for cover if something unfortunate happens to you. Then you need to pay for it too. So, set your budget such that it covers these costs. Also, assess your financial situation and settle for a payable EMI amount. For that, use an online housing loan eligibility calculator to adjust the EMI based on the eligible loan amount, a suitable interest rate and repayment tenure.
Do Your Other Homework
You need to consider a few other things besides your budget and financial health to invest in a rental property. For instance, ask yourself whether you want a multifamily or single property. Also, think about the kind of area you’re looking for.
Besides, prepare a checklist of must-haves of any property you go for. These may include:
- Easy access to public transport
- Proximity to railway and metro stations
- A good neighbourhood with no reported criminal activity
- Nearness to hospitals, banks and market
Choose a Suitable Location
Location is everything for any real estate investment. So, learn everything about a location before finalising it.
Rental properties near desirable locations can help boost value and demand. So, you can increase your rental asking price.
Besides, see how to rent the property as per the location. For instance, if it’s a tourist destination, the property can best serve as a vacation rental. If the property is near college campuses is perfect for student housing.
Most importantly, ensure you can afford to buy a property in the chosen location. You can use the housing loan calculator to check if the eligible loan amount can finance this investment.
Consult a Real Estate Agent
What you must consider when choosing a rental property is different from that for a primary residence. So, speak to a real estate agent to get the best deal possible. Make sure to pick an agent with positive customer reviews and a good reputation.
Take a Home Loan
Now that all are other things are sorted, go for a house loan available at competitive interest rates. If you have an existing loan with a high interest rate, you can transfer the balance of the home loan to another with a lower interest rate.
After following these steps, go ahead to own a suitable rental property and generate income! Remember to take home loan insurance after getting loan approval.