Buying an investment property

  1. Determine your budget
    For investment properties, you’ll usually need to put 25% down. Factor in another $500 for the inspection.
  2. Decide property type
    Condos and townhomes tend to be less expensive and easier to maintain since the HOA takes care of all common areas (e.g., the grounds). If you want a low-maintenance, easy place to rent out long-term, a condo is probably your best bet. However, cons are that you will need to pay the monthly HOA fee, there will be limitations to what you can renovate, and SFHs often appreciate in value faster in many markets. Also, some HOAs mandate owner occupancy.
  3. Validate the business model
    Calculate your total monthly payments and verify that it will exceed the rent you’ll be able to charge. Monthly payments include:
    • Mortgage
    • HOA fee if applicable
    • Homeowner’s insurance
    • A few hundred a month for repairs and maintenance (I averaged about $200/month for one duplex and $100/month for the other)
    • Annual property tax divided by 12
  4. Find an agent
    If you live in the SLC area and would like a referral, please feel free to call or text me at 669-233-9333.
  5. Choose a property!
    Consider the property location, which will determine the kind of renters you’ll attract. For example, larger homes in residential, suburban areas will attract families; smaller homes near a university will attract students; upscale condos downtown will attract young professionals. Families will tend to rent longer whereas you’ll have more churn with young folks.
  6. Close the deal!
    Now that you own the property, time to find some tenants! (Unless you want to rehab first.)