Investing in a rental property is a big decision and, although it can be profitable, there are a few things you should consider before getting started. Before you dive deep into your investment, here are three things to consider as you’re shopping for your future rental property:
1. Know the Exact Cost of Your Property
Here’s the thing: most people who invest in property have a little extra cash on the side for rainy days. But what if you don’t? What if you’re just now getting into the business and learning the ropes? If you don’t have money growing on trees, you might find yourself in a sticky situation when the bills start to pile up.
Before you buy an investment property, ask yourself if you can pay that mortgage if you don’t have anyone renting it out. Ideally, you’ll never have a vacant property, and you’ll always have renters knocking your door down to be your next tenants—but that’s not the way it happens in the real world. It is always best to speak to a mortgage broker who can advise on whether the property is worth your investment prior to signing any agreements.
You need to make sure you can cover the cost of the mortgage, insurance, and taxes, even if no one’s living on your property. If this might be a stretch for you at this point in time, it might not be a good idea to be a landlord.
2. Know the Area
If your goal is to rent to families with children, there should be schools nearby. If you’d prefer young professionals who don’t have kids, high-rise buildings might be just what you’re looking for. Be mindful, however, that it’s illegal to refuse a rental to someone just because they have kids; if your target demographic is single, young professionals, you can’t exclude families with children if they meet all the other necessary criteria.
You might be asked about crime rates in the area or what types of entertainment the neighborhood offers. It’s important to have answers to these questions ready and available so you can showcase your knowledge of the area and make your expertise known to potential renters.
3. Hire a Property Management Company
first, it might sound like a good idea to save a few bucks by doing everything
yourself. However, if you’re not familiar with all the laws that accompany
landlordship, or if you don’t want to answer maintenance calls at 3:00 in the
morning, your bucks will go a long way when you have a team of professional property managers on
your side. Property managers handle the bulk of the work associated with rental
- Tenant screening, credit checks, and background checks
- Advertising and social media blasts
- Maintenance issues
- Regulatory compliance
- Lease preparation
- Rent collection
- Move-in and move-out reports
Being a landlord can be tough, and without experts on your side, it can sometimes seem impossible. Before you find yourself in hot water or a deep hole, hire professional property managers to help ensure you achieve positive ROI on your investment. Being a landlord isn’t always easy; if it were, everybody would be doing it. With the right research and tools by your side, however, you can turn an investment property into a profitable piece of cash. Heed the advice of others who have taken this path before you and don’t be afraid to reach out when you need assistance.