Tips for Renting Out Your Property
An investment property is a home that is not considered your primary residence and that you do not live in most of the time. Buying your first rental property can be a great way to grow long-term wealth. Here are a few tips to help you decide if owning an investment property is the right move for you.
1. Cash Flow - One way to get a return on your investment is by buying a property, renting it out, and using the cash flow to pay off your mortgage. A friend of mine's son just went off to college and is living in the dorms for his first year. But, next year he is going to buy a property near the campus and his son will live there and rent the other bedrooms out to fellow students. This is a much cheaper option for him than having his son live in the dorm. Some investors have a loss every year on their cash flow as a way to reduce their tax liability while working and a positive cash flow in retirement.
2. Location - Choosing a home in a desirable location can attract good quality tenants, adding more demand and value to your property. As in #1 above what is important to my friend is that the property is near the campus for his son.
3. Maintenance Requests - Being a landlord means more than collecting the rent every month. If there are issues with the home that need maintenance, you'll likely need to cover the costs. Make sure that you budget some cash for repairs. I purchased a home warranty and in the lease made the tenant responsible for the service fee.
4. 
Vacancy - Months can go by without finding new tenants to live in your property. If you own a vacation rental in Ocean City or Deep Creek, Maryland your peak season will be when you have the most demand but in the off-season, you may have vacancies so you'll want to make sure that the rent you collect in the peak times covers your expenses in off times. A friend of mine owns several condos in Ocean City and during the off-season when she has vacancies she uses the property herself. Be sure to budget for possible downtimes.
5. Get Insurance - you should have landlord insurance as well as property insurance in the event that there is property damage, liability, or loss of income.
6. Tax Benefits - I am not an accountant, however, there will be expenses that you can claim on your Schedule E tax form for owning a rental property. And, some investors carry a loss, reducing their tax liability, until retirement when income tax is lower.
7. Appreciation - If you plan to keep your home for a few years, the chances are that it will increase in value over time. I purchased my rental property in 2003 for $40,000. It has appreciated considerably since then.
8. Financing - Choosing the right type of financing for your investment property (or properties) is essential. Ask me for a referral to a lender that specializes in financing investment properties.
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