investing Archives

Investing in a rental property can be a great way to earn additional revenue. Perhaps you’re a homeowner looking for wealth-building opportunities. Or perhaps you’re simply interested in property management. Owning a rental property is an investment of time and money, and it’s important to carefully consider everything that is involved before you make the decision. Here are some tips to consider if you’re thinking about becoming a landlord.

Make Sure you Have Time
Owning a rental property isn’t your typical investment. You are responsible for the maintenance and upkeep of the property. If something breaks, it is your responsibility to fix it in a timely manner, or hire someone to fix it. If a tenant is late on rent, you need to make sure that the payment goes to the mortgage company on time regardless, and take the necessary steps to prevent future late payments. And if you want the property to appreciate in value, you need to take the time and money necessary to do routine maintenance to the property, and add updates. If you’re already working long hours, or have a family or kids to take care of, think carefully about the changes you would need to make to your current schedule before making your decision.

Choose the Right Property
The right rental property can make all the difference in the return you see on your investment. Make sure you take location into consideration. The school district, crime rate, amenities, and your potential renter base are all important factors in how profitable your property will be. Choose a neighborhood that you’re familiar with, and has a high demand for rentals. Unless you have the time and resources to devote to a fixer-upper, choose a property that requires minimal cosmetic maintenance. Bring a contractor with you to go and look at properties to determine what it will cost to renovate the property before it’s available to rent.

Choose the Right Tenants
Before you start to advertise your rooms/apartments for rent, take some time to come up with a screening process. Call your applicants’ previous landlords to make sure that they have a positive rental history, and use an online service to run a background check. It can also help to talk to more experienced landlords. They can give you tips and insight about what to look for in each applicant you screen.

Decide on a Rent Amount
Choosing tenants goes hand-in-hand with choosing a rent amount. Spend some time researching property values and rent amounts in the neighborhood where your property is. Sites like Zillow and Rentometer can provide you with a good starting point. Make sure you factor in not only the cost of the property, but maintenance costs, utilities (unless your tenants pay these themselves), and any updates you’ve made since purchasing the property.

Like any investment, purchasing a rental property comes along with risks. It is important to do your research, consult experts, and take your time to ensure you make the right decision. If you are ready to start looking at possible investment properties, click here to contact one of our licensed mortgage loan originators today!

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