Five Experts to Consult When Buying A Rental Property

Rental properties

A rental property can be a smart investment during an economic downturn. With mortgage rates dipping to record lows, real estate investing is more attractive than ever. If you’re ready to take the plunge, consider building a team of experts to assist you. Here are five key members of this team.

Mentor
There’s a lot to learn when you’re new to real estate investing, and there are many crucial choices to make. If you find a seasoned rental property owner to show you the ropes, you’re likely to feel more confident and better informed when it’s time to make these important decisions.

What makes a great mentor in the world of real estate investing? Knowledge they’re willing and able to share, a solid understanding of your goals, and a desire to help you succeed. Look for someone who has expertise about the city or neighborhoods you’re considering for your first rental property purchase. See what factors they weighed when making decisions about location and property type. Pick their brain about how to market your rental units and whether to hire a property manager, as well as other aspects of the job.

In exchange for their advice, consider offering to help your mentor with their rental business. This can give you invaluable skills for your future as a rental property owner. Ask what other experts your mentor recommends for your real estate investing team.

Financial Advisor
Before you start viewing potential rental properties, make sure your finances are in excellent shape. A good financial advisor can review your assets and assess how much you could spend on a rental property and the expenses that come with it. A great financial advisor will also help you clarify your investing goals and weigh the pros and cons of investing in real estate.

Finding a financial advisor you can trust is essential. The websites of professional groups, such as the National Association of Personal Financial Advisors (NAPFA), the Association for Financial Counseling and Planning Education (AFCPE), and the Financial Planning Association (FPA), are good places to start. You can often find financial advisors at your local credit union, including UW Credit Union, whose Investment Services team offers consultations for free and ongoing financial planning for a fee.

Tax Expert
An accountant who’s knowledgeable about taxes associated with rental properties is a must for your team. This person should be adept at determining what to deduct on your federal and state income tax returns. But fulfilling your obligations to the IRS shouldn’t be the only goal. A great tax expert will also look for ways to save you money. By choosing the right set of deductions for your situation, your tax expert may be able to reduce your overall tax liability.

As a rental property owner, you can typically deduct property taxes, maintenance costs, depreciation, and similar expenses. Your tax expert should know what sorts of maintenance costs qualify for a deduction. They should also know the ways that mortgage interest deductions for rental properties differ from those for your residence.

Lender
If you’re like many new real estate investors, you may need a loan to buy your rental property. A reputable lender can help you determine not only how much you’re qualified to borrow, but which type of loan is the best fit for your needs. Depending on your circumstances, you may want to explore different types of mortgages and investment property loans, as well as home equity loans and lines of credit.

Julio Rios, vice president of mortgage lending at UW Credit Union, says a lending partner shouldn’t just be a potential source of funds. “A great lending professional understands your goals and guides you through each step of the process,” he explains. “At UW Credit Union, we take the time to get to know you and what matters most to you. This helps us find the very best loan options for your situation and provide you with the support you need.”

To make the most of your borrowing experience, look for a lender who’ll calculate your monthly payment for each type of loan you’re considering. Also make sure your lender clearly explains the fees and interest that affect how much you’ll ultimately pay for your loan.

Real Estate Agent
As you may have guessed, a real estate agent is another key member of your team. Look for an agent with extensive knowledge about your local community and plenty of experience with rental property purchases. Ideally, your agent will have access to off-market listings and know how much local landlords charge for rent at properties similar to the ones you’re viewing.

A good agent should be able to advise you on how much to offer for a particular property and put together a compelling offer. A great agent will also connect you with other professionals you may need on your real estate investing journey. These include appraisers, inspectors, property management professionals, cleaning companies, remodeling contractors, attorneys, and insurance agents.

With a team of experts in your corner, you should be well on your way to success as a rental property owner. For more tips on buying real estate, visit uwcu.org/loans/articles .

Jessica Steinhoff is a financial education writer at UW Credit Union, a local financial cooperative that offers mortgages, investment property loans, home equity loans and lines of credit, and more.

UW Credit Union
3500 University Avenue
Madison, WI 53705
800.533.6773
uwcu.org

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