Things to Consider when Investing in a Rental Property
Investing in a rental property can be an excellent way to earn additional income. However, it’s never as simple as just buying a house and then finding someone to rent it out. The following are a few things to keep in mind when thinking about investing in a rental property:
The return on investment
If the mortgage on the house is going to cost more than the rent, it’s going to be a while before you begin turning a profit. This may simply not be worth it, especially if you haven’t paid off your primary house. Sit down and calculate a return on investment before making the plunge. Keep in mind all of the costs of owning a house, which you as the owner will be responsible for. For example the property taxes, repairs and maintenance.
The demand of the property as a rental
If the house is located in a bad neighbourhood, there may not be a lot of interest amongst potential tenants. Keep in mind the area’s crime rate, school district, amenities, access to main roads and much more determine if the property will attract tenants.
The responsibilities of being a landlord
You will need to make yourself available to your tenants at all times. If they have an issue with their plumbing, or their appliances for example, you will be the one they call. You will also be responsible for scheduling and paying for repairs.
The responsibility of finding tenants
Finding people to live in your home is rarely as easy as just placing a “for rent” sign in the front yard. You will have to attract potential tenants, and do thorough background checks into each of them. You won’t want to rent to someone who stops paying, who breaks their lease or who damages your property. You may have to repeat the process of finding new tenants every year. This will depend on how long your tenants decide to stay and whether they want to renew.
The responsibility of dealing with bad tenants
One nightmare that many landlords experience is dealing with a bad tenant. There’s nothing worse than having to chase down a tenant because they are late on rent or haven’t paid for months. Additionally, you’ll have to take legal recourse in order to evict them. This, as you can imagine, is an enormous hassle.
These are some of the things that you need to consider before you decide to invest in a rental property. That’s not to say that a rental property isn’t worth investing in. If you do your research and you use a good REALTOR, a rental property can be a profitable investment.
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