You are the owner of a rental property. Things are going well. You may be managing the property yourself or you may instead, have hired a property management company. You enjoy the rental income that comes in. It, for the most part, seems like being an owner of a rental property works for you. Is it time to buy another rental?

How do I make a decision?

When deciding if it is time to buy another rental there are thins to think about and consider. The first things to find out is if you would quality to purchase another investment property. Call your favorite local lender and complete an application. Prior to completing the application it would be important to look at finances to see if you have enough money saved to put twenty five percent down. I know, you say, I only have to put twenty percent down on an investment property. Why are you suggesting that I put twenty five percent down? I am suggesting twenty five percent down because you can save at least a quarter percent on the interest rate for the loan to purchase the property. It is worth it. Don’t you think?

What else should you consider when trying to decide if it is time to buy another rental? What are your overall financial goals? Do you need to save for retirement? Are you wishing you had extra money each month? Do you have kids that are younger and saving for their college education seems a dream, but far from reality?

Questions you should ask

Here are questions you should consider before making your decision about purchasing another rental. What is the real estate market like where you would be purchasing your investment property? It is a buyer’s market or seller’s market? What is the rental market like in your area? Is there a shortage that exceeds demand or are there too many rentals available? Call your favorite realtor and get the answers to these questions. Also ask your realtor about the current market. What is the current rate of appreciation? It is ideal to buy in a market that is showing healthy appreciation. If the market that you would be purchasing in is not showing much appreciation what is expected? That is hard for anyone to predict but talk to knowledgable people, that you trust and get their impression of the market and what they think might be happening in the future.

Knowing the answers to these question, you can make an educated decision about purchasing another rental property. Buying an investment is not usually an emotional decision like buying a home that you will live in. DO the research and decide what is best for you.