Thinking about purchasing your first buy & hold rental property? Investment properties are a great opportunity to build wealth and gain monthly cashflow. However, before purchasing a property, be confident you are financially ready. Consider both expected and unexpected expenses:
- Down Payment: Do you have at least 25% of the property value in cash?
- Closing Costs: This includes a wide range of expenses from several involved parties including but not limited to:
- Loan Fees such as an origination fee and underwriting fee
- Appraisal Fee
- Broker/Real Estate Agent Commission or Fee
- Attorney or Title Fees
- Home Inspection: Be prepared to pay upwards of $500 for an inspection on the home.
- Insurance: Insuring a home can be quite pricey!
- Property Taxes: These differ based on where you live, but every homeowner must pay them.
- Maintenance and Repair: If you happen to be super handy, then this might not be as big of an expense for you. However, still be prepared for the heavy fees of plumbers, electricians, and other services.
- Vacancy: Are you prepared to coverage your mortgage during a period without tenants?
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