Ok, so let's say you have some extra savings that are not making any real interest in your bank account. You have a few options for investments to let that money work for you, instead of the other way around.
Before buying the first house you see, there is a good amount of research needed on your part, to make sure the property is what is best for you.
How much risk are you willing to take? Are you willing to trade higher cash flow for a lower quality neighborhood? By lower quality, I mean higher crime rate, lower income average of tenants in the area, etc.
For a first property, I recommend going in a stable area with good schools and low unemployment rate. This will lead to more stable rental clients, hopefully longer tenancies, etc. Property tax rates and HOA dues vary greatly, so make sure you know what these are up front. This could mean the difference between positive and negative cash flow.
Do you have extra funds beyond the down payment and closing costs to cover future repairs? Not everything can be forseen. You may be hit with needing a new water heater, oven, or have a plumbing issue. You will need to have some savings to cover these necessities.
When you find a good house, Make sure you get a good inspector out there to thoroughly check the home.
Calculate your operating expences from insurance, vacancy, mortgage, repairs, property management (highly recommended) Taxes and possibly HOA dues, etc. How much can it rent for realistically?
These are just a few. Feel free to comment on some other areas to consider before purchasing the investment property.
Thanks, Christine Kankowski with House Match Property Management - Temecula, California
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