Do you think a rental property is a good investment? Are you thinking of buying a rental property?
One of the popular options to diversify the portfolio is to invest in rental property. Unlike other handy investments like stocks and mutual funds, rental properties need significant hands-on work Also; rental income is not a ‘passive income’ as it is referred to generally. It requires a lot of efforts to bring in a return.
Here are some rental property investment tips for you. Consider these six things before becoming a landlord:
Are you ready to become a landlord?
Being a landlord is not an easy cup of tea. It involves early morning complaint calls and managing it with a full-time job is a real challenge.
Get a hang of the business
One must consult with the other investors, mortgage brokers and real estate agents who are in income property business. Before getting into the rental property business, get a feel about what owning a rental property is really like. Reading personal blogs are really helpful for this decision.
Don’t bank on the appreciations only
A rental property is a good investment if it yields a profit. But, the property may yield returns at the point of sale or it may lose value depending on which way the market runs.
Ensure that you have enough cash to maintain a rental property
One should always expect to need a sizeable down payment, reserves to pay for repairs and maintenance. So ensure that you have enough dollars to survive these setbacks!
Consider getting a live-in property
If you’re getting a home for yourself, make sure it has two or three extra units. It can be a lucrative way to start investing. A lot of people in their early twenties are going through this route. It is a good idea for beginners.
Rental property owner needs extra hands in management
In the long run, you may need someone to manage your property, including dealing with tenants and arranging for repairs. You should budget for paying about 10 percent of the rents collected for this sort of service. But, you will still need to be there at the beginning to make sure the building is in good shape and the tenants are dependable.