Basics of Property Management: Screening Potential Tenants
Knowing The Right Time To Purchase A Home
Jesse Obrien
If your lease is finally up and you are starting to consider purchasing a house, you may be very eager to do it quickly. Buying a house is a big decision, and it is not something you should rush into doing. Keep the following things in mind before you make any decisions.
Consider Your Personal Finance Situation
Before you go to your first open house, you should take a close look what your personal finance situation is like.
- How much money have you saved for the down payment?
- How secure is your job?
- Can you cover a mortgage as well as other homeowner costs?
- Will you finish paying the loan off before retirement?
If you do not have a good answer to these 4 questions, you may want to reconsider purchasing a home.
Having more money for a down payment will benefit you in a couple ways. If you have saved 20% of the home's purchase price, you will save money by not having to pay private mortgage insurance (PMI). It will also make it easier to get a loan from a bank.
Consider The Current Real Estate Market
The market is always fluctuating based on the current economy. This means that there are times when buying a home benefits you as the buyer, but there can also be times where you should wait because it benefits the seller.
Pay close attention to what the interest rates are, and where they might be going. It helps to read the financial section of the newspaper and familiarize yourself with trends in interest rates. Interest rates always fluctuate fractions of a percentage point every day, you can get a good idea if they are trending up or down just by reading about it frequently. Interest rates for a 30-year fixed-rate mortgage hit an all time low in January of 2013 at 3.41%. This should give you a great indication of how low they can go.
The supply of available homes on the market also determines the asking price. When there are more homes for sale than buyers, it's considered a buyers' market since sellers will be more desperate to sell. When supply for homes is high, it is a sellers' market, and sellers can get away with asking for a higher price due to supply and demand for real estate listings.
By being aware of these two factors, it will help you buy a home at the right time.
Share
For the last several years, I've used a property management firm to help with my rental properties. One of the tasks that they handle for me is screening applicants who would like to move into one of my vacant units. Their expertise has helped me lower my tenant turnover and find people who want to stay with me for years. Part of the process is a tenant screening credit check. Before any further contact takes place, my manager orders credit reports from at least two agencies. That is enough to tell us if an applicant is a good financial risk. Assuming the references work out, I meet the candidate and make the final decision. If you own rental properties, let me tell you more about the benefits of having a property manager. I'm betting you'll find this type of arrangement will work for you too.