Photo by Binyamin Mellish
I don’t know about you, but I’m often thinking of buying a rental property! Of course, the budget doesn’t exist (yet), but it is always a good idea to consider the viability of these types of investments in advance.
A rental property is a great investment especially if you want to earn extra cash consistently. However, before you invest in this type of property you need to make sure that it is a great investment to begin with.
In this post, I will share 4 of the main things you should consider when buying a rental property. From location to hidden expenses, there is often more to this type of income than you might have originally thought!
1. The Location
When it comes to investing in a rental property location is important. This is important whenever buying any type of real estate but when you plan to rent, it becomes even more critical. There are certain locations that are more lucrative than others.
Look to see how close the property is to the parks, schools, public transportation, and shopping centres. All of this will attract high-value tenants.
You want to be sure that your property will not be empty for a very long period of time should you lose a tenant. In a great location, there will always be a rush of tenants wanting to take the property off your hands.
2. The Type of Property
Another thing that you must have at the top of your list of priorities is the type of rental property you want. There are so many to choose from it can’t boggle your mind and leave your head feeling as if it’s in a bit of a fog.
There are single-family homes, condominiums, townhouses, apartment buildings and multifamily dwellings. That’s a lot to think about!
You need to make sure that you make the right choice based on your pocket and your goals.
3. Market Analysis
Market analysis is important when you are trying to buy a rental property. You want to make sure that you won’t be hanging on to the property too long with empty units.
Do your investigation to find out how much money you can realistically get for charging rent. It might be best to get the help of a local real estate agent or a property manager so that you don’t make a decision that can leave you tossing and turning in bed.
Investments are a big deal and bad decisions can hit you like a ton of bricks. Doing your market analysis to make sure you can actually make a profit is critical to your peace of mind.
4. Consider all the Expenses
There are a lot of financial considerations you will need to think about when you are deciding to buy a rental property. Many people are surprised to learn that managing construction waste is an important part of renovations, and using dumpsters for construction sites can help keep the work area clean. By evaluating all potential expenses, you can get a clearer picture of your investment’s profitability.
Remember you’re going to have to pay for taxes, insurance, quitclaim deeds, title search, and much more. All this is in addition to what you will have to pay for the property.
You may even have to pay legal fees as well if you use a lawyer. That’s a lot of cash to drop all at once so you need to make sure you are making good decisions.
It is never too early to get estimates and identify people who can support you in the event that the toilet breaks at 2 am. You might be surprised how many headaches you will save yourself simply by looking up Handyman Near me in Bingham Farms, MI!
Final Thoughts on Buying a Rental Property
I hope that this gives you a few things to consider when buying a rental property as an investment! This is just a starting point, so be sure to look into things more deeply.
I always love to collect this type of information in a google document. You can think of it as putting together your business plan. It is an excellent way to keep track of all the useful resources you come across while you do your research.
Don’t feel rushed into making this type of decision. The rental property market has changed a lot over the last few years and it is good to be well informed.
What do you think of these tips on buying a rental property? Are there other things that someone should consider before starting their first rental property? I’d love to hear from you in the comments!
