Are you considering purchasing an investment property in Rockville Maryland? Sitting 16 miles from the nation’s capital, Money Magazine named Rockville, Maryland’s best place to live. Boasting high employment rates and low crime, it attracts a steady stream of newcomers. Investors seeking to take advantage of appreciation rates and favorable rental income might consider Rockville an excellent place to invest. Whether you already have real estate or are new to the market, check out the advice below to make the best decision for your financial portfolio.
Things to Consider Before Buying an Investment Property
Buying an investment property does not need to be a stressful experience. Yet, the most crucial element of success is preparedness. Do your research, in the beginning, to save a ton of headaches later on. Consider these tips below as you begin considering an investment property.
- Financial Preparedness: Depending on the bank and circumstances, conventional mortgage loans are the most common finance option. That said, down payment requirements may be higher on an investment property. Sometimes, an investor may need to come up with as much as 25 or 30% down payment. To get the most favorable rates, pay down existing debt, and do your research on various loan terms.
- Types of Properties and Location: Location is crucial to consider when buying any home or investment property. Consider neighborhood median income and standards of desirable properties, whether that be single or multi-family units.
- Evaluate Profitability: Many investors start with at least some idea of the return on investment they are looking for. Consider the purchase price, estimated renovation costs, and how much potential rent you could charge based on the area. As a rental property, your net monthly income will be the total rent minus your mortgage and any additional maintenance costs or fees. Carefully consider these numbers to decide if the margin on a particular property is high enough to suit your goals.
- Plan for the unexpected: Just like in your own home, issues arise, and emergency repairs can come at a moment’s notice. As a rental property owner, you should set aside funds for any unexpected costs that can arise.
Types of Investment Properties in Rockville, MD
Before purchasing a property, consider what type of real estate best matches your goals. Below are a few examples of different rages of investment properties.
- Starting Small – Starter homes such as townhomes are around 1,500 square feet or less and generally have smaller outdoor spaces. The size and upkeep are desirable for a wide range of renters, and these homes appreciate well. Smaller single-family homes attract renters who are budget conscience and appeal to long term temporary professionals that may be working in the DC area.
- Stepping up – Larger single-family homes or new townhouses that have more square footage also provide a good investment opportunity. More modern homes offer added amenities and benefits, including the likelihood of fewer maintenance needs as opposed to an older home. While then can be more expensive to purchase, the added amenities and desirable neighborhoods allow for a higher range of collected rent.
- Going all-in – Before being swept up in the idea of a luxurious single-family home, consider all angles. While a luxury property will fetch higher rent, you will pay more as well. High-end homes take additional time to find a qualified renter leaving you to cover the mortgage and costs solely. Unless money is no object, luxury properties are not the best place to start.
At a steady split between homeownership and renters, combined with a growing population, Rockville has a lot to offer. When you do your research, calculate risk, and make a solid plan, you, too can benefit from the rental investment opportunities in Montgomery County. Are you looking for a stress-free owner experience? Hire a full-service property manager from Bay Property Management Montgomery County. We offer a wide range of services plus transparent fees to take the guesswork out of managing your investment.