Owning Multiple Properties
If you need supplement income or a means of creating consistent
income, or perhaps you want a way of building equity in a home while not
paying rent, then getting involved in the rental property business is a
great consideration. Today with so many homes on the market, it is
truly a buyer's market. This means finding and making money off rental
property is very real. Keep in mind that you will not become wealthy
overnight. However, rental property does provide an avenue of making
money.
When the right
rental property is purchased and managed
correctly, you could make money. The key with rental property is to wise
in choosing the home but also the location, which could provide a nice
return on your investment. Being the owner of a rental home comes with
many benefits in addition to steady income. For instance, you would
qualify for tax breaks specific to upkeep, as well as problems with
renters, and own a new piece of property.
By owning
rental property, you get to decide how you want to home to work for you. As an
example, some people will buy a rental home, get tenants in, and then
the incoming rent would go to pay the mortgage loan. With this set up,
equity building in the home is costing you nothing but giving you a
long-term investment to enjoy in the future.
It is also important
to know that owning rental property also comes with hard work. While
good renters would take good care of the property, you will still be
faced with repairs and updates. In addition, if you needed to go out of
town for an extended amount of time, the renters would need someone to
contact in case of emergency. Now, if you can handle home repairs then
the cost of a professional would be eliminated but chances are you will
face some type of repair that is beyond your ability.
Rental
property also comes with unique demands that may end up being too much
for you to handle. In this case, hiring a property management company
would help but there is an expense involved. If you shop around, you
could find a good company that fits within your budget, a company that
would be on call 24 hours a day should the renter have a
middle-of-the-night problem.
To be a property owner for renters,
you should first consider the caliber of renters that you want occupying
the property. The location is also a critical factor in that having
rental property convenient for renters would increase occupancy rate.
Property near a college or university, shopping, restaurants,
entertainment, etc would likely be easier to rent out than one sitting
in the suburbs.
Along with the positive amenities associated with
location, you also need to consider negative ones. If the rental
property were near an industrial site, railroad tracks, an airport,
loading dock, and so on, then you would be faced with one of two
problems. First, keeping the home occupied would be more difficult and
second, the quality of renters would probably be less than you want.
Before
signing on the dotted line, any rental property that you are interested
in buying needs to be visited, not just in the morning, but also
afternoon and night. This would give you true insight into the character
of the location, showing you both good and bad qualities.
Owning
rental property also comes with the need for a variety of professional
services. During the buying phase, the home would need to be inspected
and appraised and then after closing a renter's contract would need to
be created and executed, agreements/disclosures created, and so on. All
of these are necessary if you want good renters and to reduce risk of
lawsuit. Along with these requirements, you would also need to decide if
you pets would be allowed and if so, how many and what type.
The
most important aspect of owning rental property is the contract. Every
detail of the agreement should be clearly outlined so there are no
questions from either party. This would provide the renter with clear
direction on what is and is not accepted when renting your home. Taking
extra steps in finding quality renters is worth the time and effort.
Every
person interested in renting your property should be required to
complete a rental application and provide references, which need to be
checked. You will have many people that tell you things and make
promises but unless everything is in writing, their words mean nothing.
Remember, even normal and nice people can be dishonest so you need to do
certain things to protect you and your investment.
Although some
people have no problem in renting to a family member or friend, you need
to be very careful with this kind of arrangement. Even if you want to
help someone you care about, this is a situation that could turn
disastrous, especially if no rent is being charged. Sadly, many families
have been damaged and friendships broken because of an agreement
involving money that went bust.
Too often, even when rent is
charged, family and friends take advantage of the situation so a late
payment to them is nothing but to you, it is a financial strain and
annoyance. If you purchased rental property for consistent income, it is
imperative that your family members and friends be treated no
differently than any other renter.
The bottom line is that being
the owner of
rental property is hard work but when done right, it can be
a rewarding experience. The key to success is by taking your time,
doing a lot of research, choosing the home carefully, and not rushing by
taking the first renter that comes along. Just be realistic, knowing
that you will have repairs, that renters will cause problems, and that
unexpected things happen but on the other side, know you will be doing
something fun, earning income, and building equity.
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