Are you planning to invest some money in a residential rental property? This is a very good time to invest in real estate because the industry seems to be on the up, rebounding from really low prices. While the price of the property you buy is very important, there are many other things you need to consider to ensure that the deal is profitable in both the long and short term.
Keep the following tips in mind when buying rental real estate:
– What is the amount of rent you can expect? You must be sure of a rate of return that is at least higher than the interest rate offered by banks. Certain types of properties will give you better returns than others, but they can also cost more. A related factor is whether the property will continue to earn returns for a long time.
– What will your expenses be? As the owner of a residential property you will have to face fixed and variable expenses. While fixed expenses like taxes and insurance have to be dealt with annually, you’ll also have to deal with major repairs from time to time. Plumbing, electricity, masonry, etc. they are your responsibility and not the tenants’ (as long as the problem was not caused by the tenants). If your property is not well maintained, you will have a hard time attracting tenants or even getting the right type of rent from them.
– Will it be easy for you to find tenants? No matter how much money you invest in your real estate business, you can only get the desired returns if you easily find the right kind of tenants. The location of the property is an important factor here, as potential tenants will assess the accessibility of the place, as well as the nearby services, such as schools, hospitals, etc. People will also want to know if the place is a crime free area.
You should examine all the relevant factors before investing your hard-earned money in real estate. This is a really great way to make money as long as you eliminate all risk factors and work to highlight the strengths. One of the easiest things you can do is get advice and assistance from an experienced real estate agent before you buy a place to rent.
