With property prices dipping and real estate sales slowing, now is the perfect time to look for investment rental real estate. It can be tempting to jump on what looks like a good deal without doing your due diligence. This is a mistake and can ultimately be a costly one.
Investing in CONTRA COSTA rental property requires research and planning. You aren’t buying a future home for your family. You’re looking for a real estate investment that will hopefully generate a profit.
Make sure you do these five things before you invest in a rental property in CONTRA COSTA.
1. Learn How to Value Real Estate
As with any investment you make, you don’t want to overpay for the asset. You need to learn how to value property and determine it’s worth vs. potential income generation. Working with experienced property appraisers and real estate agents can help you.
The team at PMI Contra Costa CONTRA COSTA can provide you with a free rental analysis of your rental property. This will help you understand the investment potential of a piece of property.
PMI Contra Costa uses multiple sources with industry standard rental data to accurately determine the rent price. Some of the things we consider in pricing the rental includes: condition of the property, high and low rental benchmarks, timing available to rent the property and competing properties
2. Choose the Right Location
When it comes to real estate, location is king. You need to be more detailed than picking a state, county, or even city. You need to invest in a home that’s in an area where renters want to live. Balance this with the cost of the investment.
For example, San Francisco has notoriously high rental rates. But it will also cost you a large investment to purchase a home in the area. A smarter alternative is to buy in an area with lower home costs, low unemployment, decent incomes, excellent schools, and a high percentage of owner-occupied homes.
Most of the Contra Costa County area checks all of these boxes and makes it a desirable place to invest.
3. Create a Plan
You need to have a plan in place for how you’ll manage your rental property. Do you intend to manage the property yourself or hire a property management firm to handle the day to day tasks for you?
If you plan to manage the property yourself, you’ll need to learn tenant/landlord law, prepare your documents, and create a property maintenance schedule. You should also prepare to do the work yourself or form relationships with contractors.
Hiring a property management firm is a smart decision. You’ll need to interview different services. But once you choose one, they will handle all of the heavy lifting when it comes to your property.
4. Understand How It Affects Your Taxes
There are several more tax benefits that come with owning an investment property that you don’t get with the home you live in. When you own rental property, you’ll need to talk with your CPA or tax professional to prepare the right Schedule tax forms, which enables you to get the right tax benefit based on your financial status.This means that while you’ll need to report your rental income, you can show a lot less than what you’re actually collecting.
5. Protect Yourself
Accidents happen, and you need to protect your investment. Purchasing landlord’s insurance, public and premises liability insurance is a must for your rental property. You don’t want one event to cost you years of profits or even investments.
You should also consider purchasing an umbrella insurance policy. This will give you a second layer of protection. Having complete coverage will protect your investment of the physical home and from any unforeseeable lawsuits (such as a disgruntled tenant).
Start Investing In CONTRA COSTA Rental Property
Investing in CONTRA COSTA rental property is a smart long term investment strategy to grow your wealth. But you need to go about purchasing a property in a methodical and purposeful way. This will ensure you purchase the right property at the right price and with the right management system in place.
Contact the team at PMI Contra Costa CONTRA COSTA today and let us help you invest in and rent the right real estate.
