Investment Properties in MN: Make Money from Real Estate

Are you thinking of making an investment that could bring you ongoing passive income? If you are, real estate is the way to go. However, there are a handful of things to do up front to ensure you see future success. Read on for tips that will set you up for a profitable journey. 

Is Real Estate a Good Investment?

If you’re still on the fence about whether real estate is a good investment, understanding some benefits can help put your mind at ease, including a steady source of income and how surprisingly easy it is to get started. What’s more, the demand for rental housing is steadily increasing, with more than a quarter of Americans choosing to live in a rental these days. So, the question isn’t really whether or not to move forward, but how?

Decide on Funding

It’s important to recognize that lenders are more strict on loans for investment properties, largely because you aren’t required to carry private mortgage insurance on an investment. That means most lenders will require you to pay 20 percent or more as a down payment. Your interest rate will vary in accordance with how big your loan is, your credit report, and your down payment amount. You can use this tool to explore various loans and interest rates. 

Another financial basic is to tally your monthly expenses and the cost of housing in your market (Minneapolis home sales average $314,000). You’ll want to consider some of the hidden costs associated with an investment property, such as legal fees, ongoing maintenance, bad tenants, and extended vacancies. 

Once you’ve set your budget, it’s time to connect with an experienced and dedicated realtor. Not only can expert realtor Andrew Beitler put you in a home you’ll love, but he can walk you through the entire home-buying process, including determining your budget, getting preapproved for mortgage, home inspection, and closing.

Reduce Your Risks

One way to put yourself at less risk for many hidden costs is to hire a professional property manager, whether you’re renting your home short or long term. A property manager can handle the rental application process, run background checks, and weed out questionable applicants. They’ll take care of the general management of the property, ensuring things are kept in order and running smoothly. It’s a chance to lower your stress, reduce your risks, and cut your workload. And by keeping the property in top condition, you’re sure it will be a hot commodity for renters. Make sure you hire a manager who will make you look good, supporting both you and your tenants around-the-clock. Look for a management company that will allow your tenants to easily book your rental online. 

Change Your Name

When you’re purchasing an investment property, one of the other important ways you can protect yourself is to purchase it under a business’s identity. You’ll want to either do so as an LLC or LP — a limited liability company or a limited partnership. Basically, an LP has certain limitations on who can run it, and an LLC can have as many or as few people involved as necessary. This way, if your rental should fail for some reason, or if someone slips, gets hurt, and sues you, you won’t go bankrupt and lose your personal assets. 

A real estate attorney can help you sort through the details of an LLC or LP, but if you already know what you want you can apply right away. How-to details vary by location; for information on how to form an LLC where you live, check out this guide from NOLO. Registered Agent Inc., meanwhile has information on getting your LP up and running. 

Decide on Size

One of your biggest decisions is what type of rental you’re going to offer — a vacation property, business rental, short- or long-term residential, single- or multi-family. Many people decide to start small and go bigger, especially if they intend to tackle the landlord duties themselves. Housecall points out you should weigh the pros and cons of each rental type and size when making your decision. For instance, single-family rentals can be more challenging to sell if the economy tanks, and multi-family rentals can mean big utility bills. 

Many first-time investors can find it challenging to wade through the ins and outs associated with buying a rental property. Take your time and do things the right way for the best results. Ensure that you put yourself at the lowest risk possible, and think through the advantages and disadvantages of various property types. You can look forward to a profitable undertaking with smart, well-thought-out investment strategies.

-Katie Conroy, advicemine.com

Start looking for potential rental or investment properties here.