Reno can be an excellent real estate investment destination. The city is located just 45 minutes from Lake Tahoe, which means it provides easy access to natural beauty and outdoors adventures. Industry in the area is increasing, and the real estate sector has a lot of diversity to suit the needs of any investor.
Like everywhere else in the country, COVID-19 has had a real impact on the economy of Reno. Among other things, many businesses have been shut down and thousands of people have been rendered jobless. However, many experts anticipate a bounce back in the near future.
If you’re thinking of investing in Reno property in the Reno area, here are some of the things you should be sure to consider.
Guide to Buying Reno Real Estate
Tip #1: Know your expected expenses.
Running the numbers before signing on the dotted lines for your Reno property investment is key. What you'll need is to invest in a property that generates great returns. And to determine how much profit you’ll make from the property, you’ll need to factor in your expenses.
Common expenses include:
- Mortgage repayments
- Property taxes
- Maintenance costs
- Property insurance
- Lost rental income during vacancies
Are you looking to self-manage your Reno property or hire a professional to do it on your behalf? Your answer will depend on whether you have the skills, time, and experience to manage your property effectively.
If you lack these qualifications, hiring a professional property management may be in your best interest. You'll need to pay a management fee, but this is often more than offset by the convenience and profitability a property manager can provide.
Tip #2: Consider a turnkey property.
Do you have prior experience with home improvement projects? If yes, buying a fixer upper may be a great option. You may be able to greatly increase your home’s value by renovating it.
However, if you lack the necessary experience in carrying out huge renovation projects, buying a turnkey property is probably your best option. A turnkey property is one that's ready for occupation. Once you buy it, you could begin to look for a tenant to rent it to immediately.
Tip #3: Think about how you’re going to finance the purchase.
A seller will expect you to provide them with the financing details once you make an offer. This means that you’ll need to think about the finances even before you start throwing offers around.
There are many financing options in the market. They are as follows:.
Private lending: The process of securing financing through private lenders is usually much quicker compared to traditional mortgage financing process. On the flipside, you'll likely have to pay slightly higher interest rates.
Home equity: You can also finance your investment by drawing on your home equity. You can do this either via HELOC, cash-out finance, or a home equity loan.
Seller financing: If you are unable to secure a loan via conventional means, this can be a great option for you. This involves securing a loan from the person you’re looking to buy the rental property from.
Online mortgage providers: This is a growing trend, and another great source to consider for funding your investment purchase. It’s can be more convenient than one from a conventional mortgage provider. Examples of online loan marketplaces include Rocket Mortgage, LoanDepot, Quicken Loans, and LendingTree.
Tip #4: Keep your emotions in check.
Don’t make the mistake of getting emotions involved along the process. More often than not, emotions can lead to bad investment decisions. You’ll want to think of your the investment as a business transaction.
So, try as much as possible not be carried away by lush kitchen design or a manicured garden. If you find it daunting to seperate emotions from decision making, consider hiring professional services from a professional real estate agent.
While due diligence may seem costly, it can certainly be worthwhile in the long run.
Tip #5: Buy in the right location.
There are plenty of great reasons to invest in Reno's real estate market, but the specific location in which you buy your rental property can make or break your chances of success. If you buy in a desirable location, you’ll have high chances of renting to the right tenants. You may also be able to charge a higher rent.
On the other hand, buying in the wrong location may mean long vacancy rates and the wrong caliber of tenants.
So, when choosing a location, make sure to choose one that has some of the following attributes:
- Low property taxes
- A good school district
- Low crime rates
- Easy access to a public transportation system
- A growing job market
- Plenty of amenities, including malls, restaurants, theatres, and parks
If you are not sure about a particular location, seek help from a local real estate agent.
Tip #6: Make an assessment of your risks.
Every investment type has its own set of risks, and a real estate investment isn’t an exception. Make sure you're well aware of the risks involved in property investing prior to jumping in.
One risk is that you buy property in a less desirable location, which could cause long vacancy rates.
There is also the risk of renting to problem tenants. Problem tenants are every landlord’s worst nightmare. They are high maintenance, cause excessive property damage, cause nuisance to other tenants, and aren’t consistent with their rent payments.
Other risks include buying the wrong property type, facing an increase in property taxes, and the local economy taking a downward turn.
Tip #7: Hire a property management company.
How your Reno property is managed can make all the difference!
Being a landlord is a skill that goes beyond just collecting rent at the end of the month. While anyone can buy an investment property, not anyone can manage one—at least successfully.
Do you have prior experience managing a rental property?
If so, self-management can seem like a good option. However, if not, then hiring a professional can be the best option for you.
A lot goes into managing a property. Among other things, you have to know how to fill it with great tenants, deal with rent collection issues, respond to maintenance calls promptly, and even understand Nevada's tenancy laws.
Done well, a real estate investment can be a pathway to financial freedom. Follow the aforementioned tips to avoid making common mistakes. Also, remember to always hire a professional whenever it becomes necessary.
If you're looking for a professional property management company in the Reno area, get in touch with the experts at Evolve NV. Our team has years of experience maximizing the success of our clients in Northern Nevada.