If you’re considering investing in real estate, you’re probably thinking about how to gain a low-risk return on a financial investment, with as little headache as possible. Simple, right? There are some steps you can take to create a better scenario for yourself as you purchase your first (or second, or third, etc.) real estate investment property.
I recently met with a client that was interested in investing in Nevada real estate for the first time. After chatting with them about some of their goals and expectations, I picked up the phone and scheduled a meeting with my preferred lending contact Richard Rodarte (Alterra Home Loans) to get them pre-qualified. As I sat in on this meeting with the couple and Richard, I gleaned some great tips that I want to pass on to you.
1. What are you willing to pay for your real estate investment property?
Your lender can break it down for you to see if the payment is feasible. Though seemingly obvious, a good investment property will have a lower payment than what you can charge for rent in that particular area.
2. How much do I want to invest as a down payment?
If you have money that you want to put down over and above the required down payment, think about what gives you the best sense of security; having a smaller mortgage or having a nest egg of money. Though the smaller mortgage is appealing, you may want to consider having a nest egg assigned to that property to offset any future repairs or possible months of vacancy. My investors decided that splitting their money, half down/half as a nest egg, was their best security move.
3. Should you open a separate checking account for your investment property?
When you have an investment property, a good practice is to open a separate checking account assigned to that property. This is where you will keep your “nest egg” if you chose that route. This is the account where you put the rent, pay any and all repairs, and pay the mortgage. This separate account will help you out at tax time and will give you a good ongoing snapshot shot of financial health of this property.
4. To insure or not to insure?
Another recommendation is to get an umbrella insurance policy. An umbrella will cover all the gaps between your regular insurance, fire, flood, etc. It is not expensive and gives you great peace of mind if a calamity strikes your investment property.
5. Should I put the property in my name or a family trust?
Last but not least, consider putting the property in a family trust. This small investment protects you personally in the unfortunate event of a legal dispute and considers your family in the long-run as it deals with heirs and probate. The bottom line is that this considers the future of your property and where it ends up.
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Are you considering an investment property in Northwest Las Vegas in the near future? Contact me and let’s discuss your options, possible locations, and your goals. The Northwest Las Vegas valley is a great place to live and to invest. There are a number of fantastic communities that are close to shopping and activities. Call Your Northwest Las Vegas Agent today!