If you’re thinking of buying a property for an investment, it can be a good way to make money. However, interest.com says, being a landlord isn’t for everybody. But if you think you’re up for the task, rental demand is expected to be strong in 2016 which means higher rents. But keep in mind, this is a long-term investment so is definitely not a way to get rich fast.
If you decide to go in this direction, recognize that having rental properties is a business. It requires a lot of time and involvement and having a good business plan. Remember, the property you buy needs to make sense from a business perspective, not because it’s simply a house you’d like to have. With that said, the property you plan to rent out should be practical and reasonably price. You’ll also need at least a 20% down payment.
If you’re going to snatch up a property to rent it out, start small. It’s recommended by interest.com you stick to a single house or smaller multiple-dwelling unit. That way, you can see if being a landlord is really for you. You’ll get a feel for maintenance and other work required to maintain the property.
It’s best to buy an investment property in a location that you know. In this case, location, location, location really does matter. Some potential renters might not want to look at your rental property if it’s in a bad neighborhood or one with poor schools.
Choosing the right rent can be tricky. It really depends on the neighborhood. Consulting with a real estate agent is best, especially if you want to cover your costs. Just because you can afford a loan, adding in property taxes and insurance could make it unaffordable. You’ll also want to budget for regular maintenance not to mention repairs that come when renters move out.
When it comes to managing the property, you can either hire a property management company, or you can manage the property yourself. If you decide to do it yourself, it’s a good idea to consult a real estate lawyer. Also, before renting or hiring a management company, get references and hire a company to do a background check.
If you can manage the property yourself, you’ll save anywhere from 7% to 10%. But you need to ask yourself if you’re ready to take care of getting calls from tenants and doing routine maintenance work such as fixing leaky faucets.
Finding good tenants and keeping them happy is the key to being a good landlord. Each time you get a new renter, it costs money to get the place fixed up.
In the end, a rental property can be a great investment if you’re willing to put the time and energy into it.
Comments (3)Subscribe to CommentsComment