Today’s first caller has a decent chunk of home equity available and a decent credit score. He’s interested in buying his first rental property close to home. What’s my advice for this scenario?
On this Q&A edition of Investing in Real Estate, I’m taking three of your questions on buying rental properties in your own backyard, finding lenders for new construction investments, and calculating ROI. Click play to hear my answers to your great investing questions!
On this episode you’ll learn:
- What to consider about buying a rental property in your neighborhood.
- Ideas for finding a lender for new construction rentals.
- What to factor into your ROI equation.
What to Consider About Buying a Rental Property in Your Neighborhood
Very rarely is it a wise move to buy rental properties in your backyard. Selecting the right market is instrumental to your success, and it involves researching things like vacancy rates, crime data, and more. Especially if you don’t plan on managing the property yourself, there’s no reason to invest close to home. Instead, consider investing in landlord friendly states and in proven markets with job diversity, strong schools, and consistent cash flow. Check out this video on choosing a rental market.
Ideas for Finding a Lender for New Construction Rentals
If you’re looking for lenders, the first resource I can recommend is my friend Dan Kraus at Churchill Mortgage. The second thing to consider is that there are a lot of great small, local banks out there that are looking for business. Go shake hands with some bankers in your town and find out what types of banking products they can offer. Private money is also always an option for creative lending.
What to Factor Into Your ROI Equation
Determining your return on investment can encompass many different factors. Here’s a blog post I did on calculating profit on an investment.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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