If you’ve been thinking of buying an investment property, here are some indications that you’re ready to take the next step:
- You own a primary residence and are familiar with homeownership.
- You have the 20% minimum for a down payment.
- You have savings, typically enough for six months of living expenses, in case of unexpected life events.
- You understand that surprises happen—roofs leak, water heaters break, tenants relocate—and you can budget for potential repairs and vacancies.
- You are prepared to manage the property yourself or to pay upwards of 8% of gross rents for a professional property manager to select tenants, collect rents, and handle maintenance requests.
- You are knowledgeable about key aspects of the community you are looking to invest in: rental rates, schools, services, and any pros and cons.
Once you have met some, if not all, of the above criteria, the next step is to find an experienced real estate agent who specializes in investment properties and can help you locate and secure a great property. Then the fun begins: you start to build wealth while someone else pays off your mortgage on an appreciating asset.