Are you thinking about buying an investment property? Or maybe buying a new home but keeping your current home as a rental? Rental properties can be a great way to make money if you do your homework first.
A rental can offer some advantages that other investments may not – you can finance your investment at fairly low interest rates, there are some tax advantages and while your property appreciates in value (hopefully), you receive rental income. Rental properties can serve as a hedge against inflation too – if prices rise, rents usually do too. Other investments may not do any of that! Make sure you do your homework first though.
Owning a rental property isn’t for everyone. If you are the right person, it can be a great investment. The right person would be someone with excess funds to invest so that if/when there are repairs needed, you have the ability to fix the property. You may want to keep sufficient funds for reserves to cover vacancies. You also need to be able to qualify for the mortgage on the investment property.
There are challenges to being a landlord – you need to fill the property with renters. And if/when something breaks, you know the tenant will call you! Make sure you are comfortable with the thought of phone calls at any time of day with problems like broken toilets, etc! One solution is to hire a management company to take care of the problems and also collect rents, etc. It eliminates the phone calls but also costs you money and takes away some of the profit from your rental.
To find a good rental property, think about location – how easy will it be to find renters? Think about access to stores, bus lines and other items a renter may want. If you are thinking about turning your own property into a rental, will it be a good rental? Is it in a good location?
An investment property can be a great way to make money in the long term. You need to decide if you are ready to be a landlord before you buy a rental property. Once you make that decision, contact your realtor and look for potential properties and get a mortgage approval so you are ready to buy!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
