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March 12, 2021

Real Estate Investing 101

5 Hot Tips for Managing Your First Investment Property

Photo by Jessica Bryant from Pexels

Are you thinking about buying an investment property? Have you thought about the advantages of having a place to rent out and keep on hand to improve your investment portfolio? There are a lot of benefits of investing in rental property. If you’re thinking about buying your first home to fix up and rent out, here are some tips for you from Mighty Hand.

1. Do a lot of research.

Investment properties are a great way to earn extra money and improve your portfolio, but you need to make sure you are well informed of the appropriate issues before making the leap into investing. Here are a few topics you should familiarize yourself with before purchasing your property:

  • Research the mortgage rates in your area. Make sure this will be a worthy investment and not a money pit.
  • Learn what licenses you need to obtain. Depending on what state your property is in, you may need different licenses or business designations.
  • Talk to an accountant. Inform them of what your plans are and how you intend to manage the property. Hiring an accountant is a good idea, anyway, if you will be forming a small investment property business.

2. Choose the right property.

After you’ve determined mortgage rates, thought through the logistics, and gotten the go-ahead from your accountant, you’ll be ready to choose a property. But how do you pick the right one? There are a few things to remember when making your selection. Choose a single-family home instead of a condo as it has been shown to be a better investment in the long run — tenants tend to stay longer. You should also make sure the property is not in complete shambles as it will take more of an upfront investment for you to get ready for rental. 

3. Fix up your property.

If you buy a property that needs some work, you will want to fix it up before you start advertising it on the rental home market. This is another thing you should talk to your accountant about — make sure renovations are within budget. For instance, the property might need a new roof or roof repair or it might need some gardening work. Maybe it even needs a new bathroom floor. Whatever it is, you should make sure that the property is up to code (based on where you live) and will be safe and comfortable for the tenants you work with.

4. Protect yourself from litigation.

As a rental property owner and operator, you will come in contact with a lot of different kinds of people and will have many different experiences. You can’t predict everything that will happen, but you can make plans for some events down the line. Forming a limited liability company (LLC) is one way to protect yourself and your personal assets from litigation and other liabilities. 

Forming an LLC can also be beneficial from a tax perspective as you file taxes as though it were a sole proprietorship (also known as pass-through tax). In order to form an LLC, you can either hire a lawyer or avoid those kinds of hefty fees by using an online service.

5. Look into services for all of the above.

Doing construction work, determining your budget, and forming an LLC — you can do all of these things yourself, but asking the help of trusted professionals can improve your chances of succeeding in the investment property sphere. 

Are you ready to take the next step in your investment property business? If you’re looking for a reliable partner to help you make the necessary adjustments to your new property, Mighty Hand Construction has your back. For help on new builds, remodeling, new roof construction, and more, reach out for a quote today!

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