When done right, investing in a rental property can be a lucrative venture. As a first-time real estate investor, you’re probably eager to get the ball rolling on your new business idea! Whether you plan to rent out your property to long-term tenants or short-stay vacation goers, there’s a lot to do before you can start earning rental income, though. To help you along with the process, check out these three steps, brought to you by Scates Real Estate.

Organize Your Financials

Even if you have purchased a home to live in before, buying an investment property is a whole new ballgame. Lenders are more strict with loans for properties you won’t be living in, so you really need to have your ducks in a row before you apply for a loan. You’ll need a stellar credit history, so if you experienced any hiccups in the past, you should address them now.

Experian notes there are several things you can do to improve your credit score, like paying down credit cards and closing lingering accounts. It also helps to make payments to your credit card and utility companies in a timely manner, and don’t apply for any new lines of credit unless you absolutely need to.

Also, keep in mind that you’ll need a larger down payment than for your typical home loan. Lenders will scrutinize your bank account activity, and if you suddenly make a large deposit, they will see that as a red flag. You’ll need to maintain a significant balance or have a good explanation for where the money comes from; a loan from a family member, for instance, won’t do, but you could sell off an asset to acquire the funds. 

Search for the Perfect Property

You’ve addressed your finances, applied for a loan, received your pre-approval letter — now onto property hunting! Selecting the right property for your investment is a must if you want a steady flow of quality renters. Your next step is to partner with a knowledgeable and trustworthy real estate agent, and then get serious about shopping.

Be selective when choosing your location. The ideal neighborhood, Millionacres explains, will offer residents a safe environment, easy access to conveniences, and will offer appeal to the type of renter you’re looking for. You’ll also want to ensure that you’re allowed to make any upgrades you feel are necessary to rent the property, since some communities have limitations on such things.

Prepare the Home for Rent

After scrutinizing the market, viewing possible properties, and finding “the one,” it’s time to turn it into the type of place that will attract and keep the renters you want. With that in mind, what upgrades do you need to invest in to make your rental more appealing?

As MySmartMove points out, topping the list for many applicants these days is high-speed internet. With so many people relying on the web for work, school and entertainment these days, a fast and reliable connection is a must-have. Happily, 5G is now in the Twin Cities and surrounding areas, so if you play your cards right, you can offer them the best possible connection.

Some other high-priority features to consider are things like soundproof walls, walk-in closets, in-unit laundry appliances, and a balcony or patio. And while you might think it applies only to home buyers, you should consider curb appeal. Renters want a pretty place to come home to, too.

Generating wealth with real estate is a popular investment strategy, but it’s also a big commitment. Make sure your financials are in the right place, do plenty of research before buying a property, and be ready to make the upgrades that will make a difference to renters. With proper planning, your real estate venture is much more likely to succeed! Be sure to connect with Scates Real Estate for help in making your investment a wise one.