What To Consider Before Investing In A Rental Property

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.

Pro’s                                               

  • 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

Con’s

  • 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.

42 thoughts on “What To Consider Before Investing In A Rental Property

  1. Nice Article!
    You shared such a nice information. Before read this article I was not that much confident in the real estate. When I read the pros and cons and the tips which you shared that are very helpful for everyoen who is new and want to invest in rental property. Thanks for sharing this article.

  2. This is such a good article, many people over the fact that rental property include maintenance cost and it later becomes a headache for them. You should also do prior research before making an investment .

  3. wow! Fantastic guide again, this is the second post that I am reading at this blog. Loved it. I’m not a rental investor lover but got some ideas while reading your this post. Now, sharing your blog with my lovely twitter community. Thanks for sharing such information.

  4. At what point should someone began investing in real estate?

    Meaning, should we began investing when the housing market is good/bad? Do we began investing before we retire or after we retire?

    Basically, under what conditions make it the best time to began the renting business?

  5. Hello Heather, Excellent points in this article. Great post for one considering buying a first rental property. Thanks for sharing the valuable information with us and I really loved your post. Enjoyed the read and noted some important points.

  6. Hello, This is such a good article, many people over the fact that rental property include maintenance cost and it later becomes a headache for them. You should also do prior research before making an investment . Thanks for the great info.

  7. Hello Heather, Excellent points in this article. Great post for one considering buying a first rental property. Thanks for sharing the valuable information with us and I really loved your post. Enjoyed the read and noted some important points.

  8. Shiza says:

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  11. lisa says:

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  14. gfree says:

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  17. lili says:

    My parents have been considering getting into real estate investing. So, I liked what you said about thinking about getting multi-unit rentals. That does seem like a good thing for a first timer to do. Especially if they got multiple units in a college town.hiring a ghostwriter cos

  18. lisa says:

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  19. omia says:

    Great comments on REITS vs owning individual properties. As a real estate investor, I can attest that owning rental properties is definitely not 100% passive. REITs are a good way to diversify into real estate without any headaches.Villas for rent in Dubai

  20. You know what, your blog states factual about rental property. I’m thinking about renting a townhouse soon. I need to move out of my old house. You already discussed here what should do before renting one. You are awesome.

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  23. shiza says:

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    Your dream home sounds a lot like mine, minus the chickens. (Though I wouldn’t mind having neighbors who have chickens that I could buy eggs from.) Our next family adventure is taking us up to Boise and I’m hoping to find a dream home in the next few years to make our own. I hope everything works out for you (and selfishly because I want to see all the deets on how you renovate!) Sending prayers and hopeful energy that your home sells in time for you to snatch up the home you want.parc canberra ec

  30. I like that you advised us to choose an area that has all access to amenities. As possible, everyone would want that, but then again, I think that area will cost a lot of money to live in. We will need an expert Real Estate Agent to help us find an area you advised because we plan on moving in soon.

  31. Very nice tips which anyone can apply when selling their property. A word of mouth through friends and family is also fantastic since you can get a buyer just there!.

  32. These are great pics! We are looking in buying an Oliver and wondered what you tow yours with. Have you gotten very much use out of it? Any regrets? Any insight would be so helpful.

  33. lisa says:

    These are very intriguing numbers but the majority of Canadians would not be saving the difference from renting. Those numbers assume that there’s actually something left after renting as well which for many does not exist. The average savings rate is less than 1% in Canada.

    I agree that needing money is tricky, but Canadians have embraced HELOCs and the interest rates are extremely low right now and not expected to increase. This solves the need to be liquid.

    In all fairness owning is still better unless you’re in the 1% of earners or already have family wealth.owner finance specialist

  34. lisa says:

    These real estate agents want to play with people till they are satisfied with it. I do not know why they do that. If they really want something from their consumer, they should have just let them know about the fact rather than doing such thing.face masks online

  35. Thanks for telling me that I should look into areas that are heavily populated to attract more renters who might be interested in my rental property. My husband and I are looking into rental properties that we can rent out to other people as a possible source of income, but we’re not sure yet if we have what it takes to be good landlords to our tenants. It might be a good idea to consult experts in property management first before starting any purchase.

  36. You make an excellent point about learning about the current state of the real estate market and the fluctuations and trends in the area you’re hoping to invest in. I would imagine that anyone looking to make additional money in this type of venture would also want to hire an experienced attorney who’s familiar with local and national rules, regulations, and laws. This way they can help draft good paperwork and what to do if issues arise.

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