The FYI on the ROI of a future rental property

Here’s a look at the latest developments in the mortgage market this week.

Finding the right rental property

Source: iProperty Management

If you’re looking to buy a property to rent out, should you buy a fixer-upper or a move-in ready home? It all boils down to your return on investment (ROI).

A good ROI for a rental property is typically more than 10%, but 5%–10% can also be acceptable. But the ROI may be lower in the first year, due to the upfront costs of buying a home.

A fixer-upper may offer more upfront savings as their average list price is 25% lower than turnkey homes.

Homeowners looking at a 29.3% year-over-year increase in home equity can use a cash-out refinance to pay for their first investment property.

How to buy the right rental property

👀 Look for a home with your ideal tenant in mind. Know how much rent they would want to pay and what they expect from a home.

✍Use an ROI calculator to make sure the home you’re considering will likely generate the profits you’re after.

☔Prepare an emergency fund. You’ll need to be ready to cover the cost of repairs, ongoing maintenance, or lost rent when the home is vacant.

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