If you’re a first-time property investor in Boise, it is hard to know what type of rental property is right for you. There are many different property types, and each one has its particular benefits and challenges. For beginners, experts typically recommend buying a single-family dwelling. But should you focus on foreclosures, older homes, or new construction? With so many options available out there, it’s essential to learn about each one before embarking on your real estate investing journey.
Experts often recommend that single-family homes are an excellent choice for a first-time property investor. They tend to attract tenants that are more financially stable and want to stay in the house for a more extended period. That type of stability is essential when you are first starting. However, you also need to find a rental property that you can afford. That desire for a great deal often leads new investors to consider buying a foreclosed home.
A foreclosed home is a property that has been reclaimed by the bank that holds the mortgage. Buying a property from a bank, comparing it to a private owner, has a few competitive advantages. Banks are often more willing to negotiate on the price for buyers who can close immediately. Another benefit is that you won’t need to be concerned about whether the property has a clean title or not. The bank will clear any liens or back taxes owed for you. Even though the buying process will be different for a foreclosure, you can still qualify for a range of mortgage options that include both VA and FHA loans.
However, buying foreclosed properties does have a few drawbacks as well. One of the biggest problems for buyers is that foreclosed properties tend to be sold as-is. The property may have been sitting empty for some time, allowing maintenance problems to develop or worsen. The previous owners may have also stripped or damaged the house in anger on their way out. It is not uncommon for owners to leave foreclosed properties in terrible shape, knowing the buyer will bear the cost of renovations. It is not recommended to purchase a foreclosed property unless you have enough cash on hand to repair it.
When looking at older homes, you may encounter similar issues. While many older homes have been updated and maintained, these surely won’t be the best bargains. But then again, it is crucial to avoid fixer-uppers, particularly if you don’t have enough cash for a contractor or the skills to do the work yourself. The lower-priced properties will often come with maintenance or repair issues, which can range from simple cosmetic ones to severe damage. However, older homes do have their pros as well. Buying a home in an established neighborhood can help you more easily calculate a competitive rental rate and even attract tenants searching in a particular location or community.
On the other hand, buying a brand new house as a rental property is becoming more popular. Nearly all tenants are always willing to pay more to rent a house that no one else has lived in before. And you can often have more say in the design and style of the house. Newer homes will require much less maintenance and repair and may have a lot of potential to increase in value relatively quickly. Oppositely, counting on appreciation is always a gamble. This is the same for new construction, where property values can be even more challenging to determine. In selected areas, you might need to hold onto the home longer to gain any significant returns, and new construction is often located farther away from amenities, urban centers, and public transportation. It may discourage some tenants from renting the home.
With both pros and cons for each type of investment property, the one you ultimately choose is a matter of personal preference. Both older homes and new construction are often relatively easy to finance, with lots of available different mortgage options. There are several financial resources available to investors for each type. Nevertheless, it is essential to note that budgeting for every kind of home will be different due to the unique properties of each one. Also, as a first-time property investor, it is vital to know as much as you can about each specific advantage of the property before moving forward with your investment.
When you purchase your new rental property, you’ll need someone to manage it. The Boise property managers at Real Property Management Nampa can handle everything from move-in to move-out. Contact us online or call us at 208-960-0660 for more information.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
