Investment properties are among the most reliable sources of passive income. If you’re considering buying a house and renting it out, now is the best time to do it, especially if you’re in the Dallas / Fort Worth area. The low, appreciating house costs and an influx of new residents make it an ideal market for rental properties. There are also many private lenders today, making the buying process easier. Here are things to keep in mind when buying properties in the area.
Properties Are Available In Various Areas
The metroplex has plenty of good areas—no matter your budget, you are bound to find a suitable property. Dallas is your bet for high-end rental properties, while Fort Worth, Arlington, Bedford, and Hurst have plenty of middle-class family homes. If you want a centrally-located property, you’ll find those in Euless, Arlington, Hurst, and Bedford.
Treat Property Investment as a Business
Many people who are new to buying properties for investment purposes overlook taxes. Often, the taxes on a listing include homestead exemptions, which have implications for specific counties. For example, in Tarrant county, homes with a homestead exemption only get a ten percent increase in taxes per year. Some areas, like Plano, have higher tax rates as well. If you’re just starting, choosing an area with lower taxes might be better.
People who self-manage their rental property must also screen their tenants well. When you’re a landowner, you cannot let emotions get the better of you. You have to put your foot down and be objective—a tenant’s credit history should matter more than sob stories. Similarly, you need to be sure that you have the resources necessary to buy the home you’re after. Consult a hard money lender to learn your options for purchasing real estate.
Hire a Realtor Before Buying
Before you purchase any property, you need to hire a realtor. He will know the pros and cons of properties in your area. When buying, you need to follow the one percent rule—you would want to rent your property for one percent of its price. For example, if you buy a home for $136,000, it should be on the rental market for $1,360 per month.
Also, look for properties that already have tenants. Passing these occupied properties over means losing out on valuable opportunities. Since the lease for homes with current tenants might not be up for a few more months, and scheduling for it could still be challenging, fewer buyers are interested in them.
Seek Out Options for Financing
When you’re starting out, you might not have the cash to purchase properties. When you’re making a bid on properties, especially ones below $200,000, you’ll be up against buyers offering cash purchases. Talk to your realtor and learn how you can provide the most appealing offer.
You can also seek out a private lender for real estate. A lender will know how to navigate all types of purchasing situations. For example, if you’re going for a house rehab, your lender will tell you to buy the property, rehab it, and take out a loan against the equity on your previous investment. This will enable you to take multiple properties, especially if you don’t have a large amount of cash on hand.
Conclusion
Buying an investment property is a great way to build a passive income stream. However, it’s not something you should enter with zero knowledge—investing in rental properties is similar to having a business. If you are new to the industry, it is good to look for partners. Hiring an experienced realtor and a lender should help you get started!
With decades of experience in the Dallas-Fort Worth Metroplex, DFW Investor Lending are private lenders for real estate ready to help you through the entire process of acquiring investment property. As both investors and appraisers, we are some of the best-qualified people to assist you in clinching that sale. Get started today—contact us for inquiries.