4 Things to Know About Buy And Hold St. Louis Rentals
One of the most popular forms of real estate investing today is still the buy and hold rental property. These are St. Louis rentals that you buy then rent out. After a long period of time, you sell off the property at an appreciated value. This is a great way to build a nest egg for retirement, and it’s one of the safer forms of investing.
Here are four things to know about buy and hold St. Louis rentals.
More cash in your pocket
Right now, you have your job and maybe your spouse’s job bringing income into your home. What if you could create another income stream? With a rental property, you can do just that.
The right St. Louis rental property will help you pay off the monthly mortgage payment while still leaving some cash for you to put right into your pocket. You can also make improvements to your property and keep up with the maintenance work. As long as you keep your property in good condition and good tenants stick around, then you will make more money each month than if you were to invest it all into a savings account.
Good appreciation and market safety
A lot can happen to a real estate market over a 10-year period. Neighborhoods can change, and rent prices can go up or down. If you hold onto a rental property for a long time, then you don’t have to worry too much about these changes. The market will go back up, and so long as you have a tenant, you will continue to make money.
When you do decide to sell your home, you will see your property’s value appreciate. You’ll come out a little bit ahead from where you started, and with your rental income, you’ll have made a lot more money than if you would have invested in the stock market.
You need to manage the property
One thing buyers forget about is what happens after they buy the property. They still have to maintain it and find a tenant to start paying rent. All of this is easier said than done. Marketing your property, weeding through applications and choosing the right tenant isn’t always easy.
If you do need help, you can enlist a property management company to handle all that work. They’ll find tenants and handymen to take care of your property’s upkeep. At the end of the month, they’ll take 10 percent of your rent.
You need a larger down payment
When you bought your home, you might have put down less than 20 percent of the down payment and still gotten the loan. When you buy an investment property, you need to put down 20 to 30 percent on your down payment, no exceptions.
The more cash you offer for investment properties the better. A lot of lenders feel weary about giving investors mortgages, especially if they’re already paying a mortgage on a personal property. Make sure you have all your numbers lining up before you apply for a loan.