The townhouse next door to me has been for sale on and off since I was looking at buying the townhouse I live in now. I’ve thought about buying it and renting it out but that all changed recently when my parents came over for dinner. They made a comment about it and I said if I could get it cheap enough I’d consider buying it as an investment rental property. To my surprise they were interested and thought that we can go in on it 50/50 and then it would be more affordable.
We went and looked at the townhouse with my Mom the next day and we figured out quickly it needed a lot of work. My Dad was out of town and not available. We came up with a list of everything we could see that would need to be fixed and came up with a very rough estimate of how much we thought it would cost. We also priced similar rentals in the area to see how much we could expect for rent. We were very excited and couldn’t wait to get going on our first rental property but also wanted my Dad’s opinion. We would have to wait a week until he was available so I wanted get as much done as possible before he got back.
Right away I knew I didn’t have enough information to make an educated decision so the next day I took my lunch break to go down to the local library. I found a couple of books on investing in rental real estate and borrowed them to learn as much as I could. I read through them and learned a lot. I learned about the costs we would be incurring as well as a lot of information on how to be a landlord and what is involved. I also learned about some metrics investors use to make decisions on whether or not to buy a property. I contacted my mortgage banker and asked her what we would need to do to get an investment mortgage in both my name and my parents name. She provided us with a wealth of information.
Later that week my Dad returned from out of town and went and saw the townhouse with us. He made notes of what needed to be changed and began talking about all of the improvements we could make and how we could make the space even better by changing the layout of the townhouse. After we took a copious amount notes we all went back to my townhouse to talk about the decision we had to make. Now that you have some background on my first rental property experience, tune in next week for part 2 of the rental property series!
Have you ever thought about buying a rental property or already have one? If so, let me know how your experiences with rental properties have gone!
In part 2 of this series, which will be posted on Wednesday next week (05/09/2012), I will be going through the financial information we needed to make a decision on the rental property.
In part 3 of this series, which will be posted on the following Wednesday (05/16/2012), I will reveal whether we decided to purchase the rental property or not and why we made our decision.