Things to know about buying a rental property
Throughout U.S. history, investing in real estate has been a path to wealth. With interest rates low and a large volume of properties on the market, investing in properties to rent is increasing in popularity. Add in the fact that demand for rental properties is high, especially in the Twin Cities, the potential for decent cash flow on a rental property is solid. But it’s a specialized kind of investment and you’ll need help in making the best decision possible. Here are a few things to consider when looking at purchasing a property for rental purposes in Minnesota.
Type of property
Are you looking to fix up a house quick and rent it? Or perhaps a townhouse, duplex or condo? Is your interest in an apartment complex or maybe even commercial property? How much of a landlord do you want to be for this property? Do you plan to keep the place for just a few years or indefinitely? These are the kinds of questions you’ll need to ask yourself before you start looking. Most experts agree to start small and residential, so a single family home or condo might be your best first step.
Location, location, location
The Twin Cities metro area is especially in demand now for renters, so it makes sense to look in Minneapolis/St Paul and surrounding areas for your property. There are many colleges in the urban centers of the Twin Cities, which means lots of college-aged students looking for and needing housing, so that is a huge plus. Every year, there will be plenty of young people needing housing. But that also means a bigger risk, since college-renters are not always the most responsible and there can be some turnover in tenants. You’ll need to consider these things when determining where to purchase your place to rent.
How much work do you want to put into this property? Will you be able to do it yourself or have to hire out – that will impact the amount of rent you can charge and your monthly cash-flow. The good news is there are still a lot of quality laborers available to hire on short notice if you need licensed help. You will want your place to be in good shape for any renter, so plan to make at least some fixes and updates to your property.
Being that rental properties are somewhat of a specialized niche, it makes sense to work with an agent who is experienced in finding affordable (and potentially profitable) rental properties on the market. You will also want someone with expertise when it comes to writing the lease agreements and documents. Make sure you choose professionals who can help you make the best decision for you based on your plans and goals.
The bottom line is, the best property investors take time in choosing the right property and invest in it wisely. They present it in the best possible light, and cover their current and future costs carefully. They also get the best rents, and it’s no coincidence. Take care of your assets, and they’ll take care of you.
The Minnesota Association of REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.