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|Page: 8 Tips for Investing in Rental Property|
Follow these tips for investing in rental property
Real estate market has always had a huge appeal amongst young and aspiring investors. Unlike stocks, bonds, and other popular opportunities, real estate market offers business newcomers something much easier to understand and work with. Properties are visible, measurable, and tangible, and rules of the game are fairly simple.
However, buying a rental home and becoming a landlord requires a lot more than writing a check and handing the keys to the tenants. Here are a couple of things you should know before you make a final decision to enter the real estate arena.
|With its promise of ongoing returns and
seemingly easy income,
rental property investing is a little more tricky than it appears at first.
Being a landlord sounds very easy – You come at the end of each month, collect the rent, and your work is done, right? Not even remotely. Bringing a property in shape requires a lot of hard work, and keeping it such requires even more. Contractors and repair services may lend you a hand, but if you own more than one property, you will have to do a lot of heavy lifting by yourself. So be prepared to deal with painting, unclogging and repairing on a daily basis.
Property taxes are a very volatile thing. Something that was a great investment can overnight become a huge tax burden. So, be smart and don’t put all your eggs in one basket. The more diversified your investment portfolio is, the less likely you are to trip over and fall. Also, do your best to not make collecting the rent your sole source of income. You may find that you have the least control over the money you earn.
Don’t get us wrong – once you make the initial investment, maintaining a property tends to be quite inexpensive. If the circumstances are favorable, you can easily repay the mortgage relying solely on the rental income. However, the key word is “if.” In reality, maintaining mortgage repayment over the long term is a very risky move. If you can’t pay upfront, at least try to cut the mortgage repayment period to a reasonable time, or find a payment that won’t bite too deep into your monthly incomes.
|It's easy to get carried away and overextend
yourself in property;
but do your numbers first and thoroughly before you invest.
Even the smallest failures can burn huge amounts of money. One leaky pipe and you will have to tear down the wall, pay for the plumbing services and repaint the room afterwards. And what about furnace, air conditioners, refrigerators and other appliances? Be prepared and always keep some money on the side for such occasions.
Or buy a flipped property, for that matter. While flipping can bring a lot of money to the table, it is also known to be quite risky and not something the first-time investors should do. Play it safe, at least until you learn to feel the pulse of the market. Moreover, if you have problems finding first-time property, some consulting companiescan lend you a hand and make this job much easier.
When people say that real estate market plays by its own rules, they mean that in literally the most possible sense. Navigating complicated property law, understanding your rights and responsibilities and all that while managing maintenance issues, can be overwhelming, especially for a newcomer. Hiring a property manager to guide you through these turbulent waters, at least until you get a handle on everything, can be a really smart move.
|At first it might seem like an unnecessary expense, but a good property manager can help you navigate the often complex property issues.|
Finding the right tenants is much easier if you do anything but sit and wait for the renters to come knocking at your doors. If you want to have any luck in the real estate business you will have to take a more proactive stance, hire a real estate agent, constantly check forum and renting websites, and do your best to make your property as appealing as possible. This will helps you to avoid making beginner mistakes.
Don’t rush to find tenants at all costs. Renters can do more damage than you realize, and if you are not careful you can end up with an empty, ruined apartment in the middle of dead season. Good tenants, on the other hand, represent not only a stable, long-term source of income, but also a guarantee that your property will be orderly maintained.
All above images courtesy of Creative Commons
Diana Smith is a full time mom of two beautiful girls and a passionate traveler. In her free time she writes on a variety of themes, including property and real estate.
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