Tips for First-Time Roanoke Real Estate Investors - article banner

Buying an investment property in Roanoke requires a huge amount of time, thought, and money, especially if you are a first-time real estate investor. You need to do a lot of groundwork, such as finding the right mortgage opportunity, managing finances, arranging important documents, inspecting the unit, and more. 

However, if you have made up your mind and are ready to go through the process, here are a few tips from real estate experts to help you with your first rental investment.

Pre-Buying Tips

When it comes to making your first real estate investment in Roanoke, there are several key aspects to consider. The following pre-buying tips will help you prepare well for your first home purchase.

    • Factor In All Apparent and Hidden Costs Of Buying A Property

House-hunting can be exciting for any first-time property investor. However, before you begin, it is important to consider all the costs associated with home-buying, including down payment, closing costs, and possible expenses for any required updates. 

There are other hidden costs that include advance maintenance costs, HOA and condominium fees, homeowner’s insurance, and decor expenses. You should gauge your affordability and plan your budget accordingly, which is the next important tip.  

    • Plan Your Budget

After evaluating all the visible and hidden costs, you should plan your budget. The budget your investment would require also depends on the type of property in which you want to invest. For example, a single-family property’s maintenance will be costlier than for a multi-family unit and will therefore require a larger budget.

You may also wish to save more money and manage your expenses by taking small steps like canceling unnecessary subscriptions, setting up an auto-transfer to your savings account, and refinancing your loans to take advantage of lower market interest rates. 

    • Improve Your Credit Score

Your credit score plays a vital role in reflecting your capacity to pay off a mortgage. Before approving a mortgage application, lenders check credit scores to verify if you are a reliable borrower. A low score can result in outright rejection of your application. 

You must therefore maintain a high credit score by regularly paying off the credit bills. Although credit score requirements differ per the considerations of the lenders, the average credit score typically required for conventional loans is 620 in Roanoke, Virginia, and for FHA & VA loans, it should be 580.

Mortgage Tips

Mortgages offer a great deal of financial assistance to homebuyers. Here are a few tips that can simplify your process of finding and applying for a mortgage for your real estate investment. 

    • Check Various Mortgage Options and Choose One That Suits You Best 

There are various mortgage options available for first-time investors with different eligibility criteria and different down payment methods. Conventional mortgages are available for first-time buyers at a 3% down payment but are not secured by the government. 

Federal Housing Administration (FHA) loans are available at a 3.5% down payment. The U.S Department of Agriculture (USDA) loans are for rural property investors with zero down payment. The Department of Veterans Affairs (VA) loans are for military service members with no down payment. 

You can consider also taking the opinion of a local property management advisor to choose the right mortgage option for your house.

    • Research First-Time Homebuyer Assistance Programs

A homebuyer assistance program is designed for first-time homebuyers. It guides them about closing costs, down payments, mortgages, and provides you with local assistance in buying a property. It also educates buyers about authorized mortgage application processes and makes them aware of fake schemes and policies. Learning about these assistance programs before making any housing deal can be highly beneficial.

    • Keep All Your Legal Documents Ready

If you have decided to apply for a home loan, start creating a checklist of the required documents. You will be required to provide the following documents for verification:

  • Loan application and recent bank statement
  • ID proof and Social Security Number
  • W-2 tax form or I-9 employment eligibility form from the past two years
  • Proof for employment, income source, and credit score
  • Pay stubs from the last thirty days
  • Federal tax returns
  • Debt records

Property Selection Tips

Buying a home is a long-term financial investment and should therefore meet your immediate as well as future investment goals. Here are a few tips that can help you to find such a property.

    • Pick The Type of Property You Want to Buy

It is important to choose the type of property that suits your lifestyle and budget. Condominium and townhomes are affordable as compared to single-family properties, but if you want to avoid shared walls and noisy neighbors, single-family is a good option. 

Fixer-upper is another option available at a lower rate than turn-key properties. These properties often require renovations and repairs. However, it can be managed with renovation mortgages that finance repair costs.

Buying a house in an HOA community may require you to pay extra fees for planned housing and maintenance. The built-up area of the house is also a crucial aspect that you must consider while making your first property investment.

    • Shortlist Your Neighborhoods Based on Your Requirements

Appearance, amenities, and accessibility are the key factors of a great neighborhood. A well-planned and maintained community with public amenities such as parks, sports clubs, and adequate commute options is preferred over a remote area.

    • Pick A Good Real Estate Agent

An experienced and licensed real estate agent can help you find a suitable home. Choose a licensed and experienced agent who knows the real estate market and helps you to find a house that meets your requirements. He can guide you through the negotiation and closing process. You’ll also want to ask help from a local property management company to find out more about the rental market. A real estate agent knows the buying market; a property manager understands the rental market.

    • Explore Properties and Go to Open Houses as Much as Possible

Virtual walk-throughs have gained a lot of popularity during the pandemic. While you can finalize your dream home on the basis of online photos and listings, visiting the property personally will give you a better idea of the look and feel of the place. 

Examine the Roanoke investment property in detail and check if it has a safe, habitable, and convenient living environment. Do not miss exploring the exterior portions of the house, such as the front and backyard, which might be of particular importance to tenants.

    • Sharpen Your Negotiation Skills

Sellers often price their property a bit higher than the market value, keeping room for negotiation, which is where your negotiation skills will matter a lot. 

If you find that the unit needs considerable maintenance and repairs, you can ask the seller to pay or compensate for the repair costs. Hiring a real estate agent here can be an advantage when it comes to negotiations as they are well aware of market prices and can help you broker a good deal.

    • Factor In the Closing Costs

The closing costs are one of the hidden costs that investors often fail to consider; this includes appraisal fees, credit check fees, and home inspection costs and is usually between 2% to 6% of your total home loan value.

Property Management Tips 

As you are buying a Roanoke property for renting, you will have to take utmost care of it to avoid liability claims or potential accidents. Here’s what you can do to manage the unit efficiently.

    • Get a Home Inspection Done

As a potential buyer, a home inspection helps you find structural and other flaws in the property. Based on the inspection report, you can decide whether you want to purchase the asset or not. Hire professional property inspectors for a detailed and qualitative inspection of the roof, walls, flooring, appliances, and plumbing systems. Also check for mold and pests.

    • Buy Rental Insurance

Rental insurance is a must to protect you from unexpected repair costs and replacements in case of significant damages. It covers liabilities in case you are responsible for damage or injury to the unit and sometimes also provides compensation against damages caused due to natural disasters such as wind storms, hurricanes, and cyclones.

    • Hire A Roanoke Property Manager

Rental PropertyManaging a new property by yourself can be daunting, especially as a first-time investor. Hiring a property manager can make your job much easier, as professional managers oversee the daily operations of the asset and also preserve the asset value.

Furthermore, they can help you with marketing, rent collection, tenants screening, repair issues, and evictions.

Professional property managers at Lawson Realty Group, Roanoke, Virginia can help real estate investors in making the right investment. Based on our extensive experience working with first-time homebuyers, we help you with every step of the buying and management process to ensure that your investment returns a high profit. Connect with us for further assistance.