If you are considering becoming a property investor, you may wonder why you should buy a rental and what indicators to look for when trying to find a property. Here are some signs indicating it’s a great time to buy if you are on the fence about investing in a rental.
Low interest rates
When mortgage rates drop, it is much easier to make a property produce income. The best place to figure out what kind of interest rate you will get for an investment property is with a lender. Check with them to figure out how to start the process and contact an agent to help you with potential properties. With current rates, you cannot go wrong with financing your investment. You may have to invest more upfront, but it will pay off month after month.
Check in with a REALTOR® to see how much your current home is worth. Some investment properties require a high down payment, but low-interest rates, refinancing and knowing your home value can make a difference. For example, if you need to put down more, many homes in good markets can appreciate 3 to 6% of their value in just on year – depending on condition and location. Chat with your lender to see if you qualify and to discuss your plan. They may offer additional options that would be more cost effective and enhance the investment.
Scarcity of units
Do you live in a location where rental units are in high-demand? Maybe your city is growing and demand for a space to rent is higher than the available properties. If that is the case, now is the best time to find a property to purchase for rental purposes. Combined with low rates and demand, investing in real estate could be the perfect solution for you. Ask about vacancy rates and what type of rental properties are in demand. You may want to speak with a property management company as you may decide not to handle the rental yourself.
If the rate of return in your market area is growing, it might be a good time to invest in property. If there is a yearly increase, you can make significant gains over time. Most investors look at gains as a longer-term investment but in a good market, it may be the time for you to move forward with your investment in rental properties. Ultimately, talking to professionals can help you decide if now is the right time to invest in rental properties!