If you are looking for a great way to invest some of your capital, buying a rental property might be the choice for you. Real estate investing is a great source of extra income as well as a safe way to reduce your tax bill, if you need more information before making the leap, check out the homewyse tutorial.
It’s not always as simple as it seems, however. Before taking any action, it is always best to do all the research. You want to make sure that you end up in a good situation with a property that will guarantee a positive cashflow.
Purchasing a property to use for rental income can have its advantages, but knowing all the in’s and out’s of such a large purchase will benefit you in the long game. You can follow Than Merrill on Twitter and get some great tips from an expert real estate investor, but first let’s take a look at some of the things that you should be thinking about before you make any commitments to buy.
Weigh The Pros & Cons
Large purchases and investments can come with risk as well as a variety of loopholes. Knowing what you are getting into is the best way to protect your money.
- A rental property can provide an extra monthly income stream
- Save money on insurance, maintenance costs and property taxes with tax rebates
- Calculated losses can end up being a tax write-off
- Rental properties can take longer to resell
- Financing can be more difficult to secure, with a 20% minimum deposit required
- You will have to adopt all the responsibilities of being a landlord
Is It The Right Time To Invest
You will have to stay on top of what is currently going on in your area’s real estate market. Know about any fluctuations or trends before deciding the right time to invest. Be sure to consider what the expected return on your investment will be compared to other investment options. Practice due diligence to ensure this real estate investment is the best place to put your money.
Don’t neglect to include all of the repair and maintenance costs that you will need just to prepare a new property to be rented out. These costs can sometimes be unexpected and delay your schedule. Cost is the largest consideration in any large purchase so make sure that you can afford to carry two mortgages without issue while you are waiting to rent your new property.
Where Should You Be Looking For A Property
In most cases, it is most convenient to purchase a property that is close to where you live, but there are other considerations as well. Areas that are densely populated by other rental properties are more likely to attract regular tenants, ensuring that your house won’t stay empty for long between tenants. Choose an area that has easy access to all amenities. Renters will want to know that they are in a convenient area and that public transit is available to closeby.
Consider areas that are currently expanding development. Newer neighborhoods can boast fresh amenities like restaurants, shopping and schools that may be an attractive draw for potential tenants. Wherever you choose, it should be a fairly central location. Properties that are located outside of urban areas are often more difficult to keep rented.
Get Some Good Advice
If this is your first time considering a property investment, doing your research may not be enough. Compile your own team of experts to help guide you through the process with confidence. Speak with a trusted real estate advisor about your options and areas of interest. Meet with an investment specialist or a financial advisor to discuss all of your investment options. Don’t forget the lawyer, there are many legal facets of purchasing a rental property that you will want to know about before you act.