The recent housing market recovery has led to an increase in the number of home purchases. However, many homeowners are not purchasing new homes for themselves; instead, they are investing in rental properties. Owning a rental property can be an excellent source of income as well as a high return on investment. However, there are a few important considerations to make before purchasing a rental property.
Learn the Facts
First, crunch the numbers. Know how you are going to pay for the property, especially in between renters. Some landlords choose to pay a management company to manage their rental properties. If you do this, expect to pay for the service. You will also need to factor in taxes, legal fees, and maintenance costs of the property as the landlord. These will need to be factored into how much property you can afford.
Location is the most important aspect of real estate. It is something you cannot change about a property. Thus, only consider purchasing property in areas that will attract renters. Consider the type of renter you want. If you want a high-end renter, buy in a high-end neighborhood. Students will be attracted to neighborhoods near schools, while families may want more outdoor space and good school districts. An attractive neighborhood that is secure and located close to local amenities and transportation will attract a wide range of suitable tenants to choose from and allow you to charge a bit more in rent.
Run It Like A Business
A rental property is essentially a business. Thus, make decisions based on your potential return in investment. Use the knowledge and experience of a good real estate agent to locate a property that meets your criteria and offers a good return on investment. If you pay in cash, you will have more leverage in price. If you finance, be sure to shop around for the best mortgage rates.
Be prepared for potential future problems, such as a long-term vacancy, late rent payments, and eviction. Have a lawyer on the sidelines if you run into any legal issues with tenants. Have a small savings stash to cover unexpected expenses, such as repairs, and time between renters.
Finally, choose the right tenant. Checkpoint Screen can help you with this, offering a wide range of tenant screening and leasing services. These screening services can include a nationwide criminal and sex offender search, credit report, application verifications, and eviction searches. Checkpoint also offers a lease and application generator, saving you and your tenant time and stress. Utilize Checkpoint’s many services today, and build a more professional rental business.