Purchasing rental properties has become increasingly popular as it can be considered a form of passive income when leased out. The world of renting out homes or condos can be quite stressful though. Things like HOA fees can eat into the profit the property yields on a monthly basis. The process of purchasing an income property is going to be vastly different than purchasing a home that you will be living in. Mortgage companies require buyers to have more to put down on the home with mortgage rates not being as favorable. The following are things to keep in mind when renting out your income property.
What Type Of Property Do You Have?
There are plenty of rental property types that have both their positive aspects and negative. Commercial property rentals differ immensely from living accommodations in various ways. Commercial tenants can be more lenient about certain repairs that need to be done like a leak. Those renting an apartment are not going to be as patient as they have to live in the home in disrepair. When you are considering purchasing a rental property do the appropriate research so you can see what type of property you want to manage.
Are You Ready To Deal With Tenants?
An online CAM course can be wise to take part in so you can see what types of issues that someone managing a property might have to deal with. There are plenty of issues that you can encounter with tenants including rent being late. This could end up costing money in legal fees as eviction processes differ to a large extent when comparing state to state laws. Destructive tenants are another issue as the tenants could be destroying your property due to you pursuing an eviction.
Property Management Company
The above issues that a landlord can encounter with tenants can be handled by a property management. The property management company does not take as much of the monthly rent as many people might assume. In some cases the company will increase asking price for monthly rent so you can make the same amount of money on the rent without the headache. These companies do thorough jobs of checking potential renter’s rental history as some people leave places they rent looking terrible with copious amounts of damage. They will also check into verifying employment so the renter will not have issues paying.
Length Of Lease
Considering the length of a lease is important as you might want to sell your income property in the coming years. With long term leases it can be advantageous for the property owner as they can build rapport with the tenants. Many people renting their properties want a long term renter so they at times are willing to give a discount for a multiyear commitment. For those people that are in areas with high concentrations of college students 9 month leases have become increasingly popular due to many students returning home for the summer.
As you can see there is plenty to think about before renting your property out. This can be a great way to earn if you take care of the small details that come with rental properties.