Rents have been soaring in the country for a while and it brings in the thoughts of owning an investment property for a steady source of income. However, a thorough research before delving into this area would help in reaching a sound investment decision. Here are the six key things to do before you buy a property for rental purposes.
Gather as much information as you can: Talking to other investors, mortgage brokers and real estate agents who have worked with income property about what owning a rental property is really like in addition to reading books and articles.
Decide if you are ready to be a landlord: Buying and managing property yourself provides the greatest return but also the greatest headaches. “Do you have the stomach for being a landlord?”
Crunch the numbers properly: A rental property is only a worthwhile investment if it makes money. The property may rise in value and yield a profit but it may also lose value depending on the direction of the market. Investment in property should be made after carefully studying the past, present and likely future trends and expected developments. This can be done by taking the help of experts who will guide you towards purchasing the best possible property.
Manage your budget: Real estate investments are usually of a sizable amount. Furthermore additional expenses are also attracted by way of repairs and maintenance. Thus, the investment decision needs to be taken after proper due diligence.
Consider a live-in property: If you are buying a home for yourself, buying one with up to three additional units can be a good way to get started with investing. It is a good way for a first time homeowner to begin.
Plan for hands on management: In the long run, you may decide to pay someone for day to day management of your property including dealing with tenants and arranging for repairs. These costs vary but you should keep an estimate of about ten percent of the rents collected for this sort of service.