There are a number of things to know when investing in a property to rent out. This process involves many pros and cons that you should know about. Check out some tips that will help you make this complicated process much simpler.
Make Sure You Have The Time
Being a first time landlord is equivalent to a part-time job. It consumes a lot of your time while you’re in the process of learning the ins and outs. Therefore, you need to make sure you have the time and energy to be a first time landlord. After all, it’s both a financial and time investment.
Pay Your Debt
As part of their investment portfolio, many investors might carry debt and this may not be a good idea for a first time investor. For example, if you have overdue medical bills, student loans or children attending college soon, investing in a property at that time will not be a smart move. Therefore, take your time and don’t rush any decisions, especially when it comes to being a first time investor.
Make Sure You Know What To Invest In
One of the biggest mistakes you can make is buying a house that is in need of repair. It can be tempting to buy a property that you can buy at a reduced price and then renovate into a rental property. However, if this is your first property, this may be a bad idea. Renovations can be very costly and investing in a fixer-upper may end up being more difficult than you think.
Find The Perfect Location
When buying a property for the first time, it’s good to have a location with low property taxes, a low crime rate neighborhood, a decent school and plenty of facilities (e.g. malls, public parks, cinemas, restaurants, etc.). Locations like these can be very beneficial to property owners since they are convenient and high in demand for renters.
Determine Your Operating Expenses
Your new property’s operating expenses can be between 35% and 80% of your gross operating income. It’s good to use the 50% rule when calculating your operating expenses. For example, if you charge $1,000 for rent, you should expect to pay around $500 in operating expenses. This rule can be very useful in determining your operating expenses.
Team Elevation Realty