If you are considering investing in a rental property, then this very well might be your time to go for it! They are a great source of income and a surefire way to get some cold, hard cash in your pocket.
However, it is no easy task, and there is a lot of time and work that goes into making it a successful endeavor.
Location, Location, Location
It may sound cliche’, but when thinking of investing in a rental property, location is key! You will definitely need to do your research on this. The first thing to look for is a home that is in a good area. Make sure you check out things like the school district, the crime rates, and convenient amenities.
You probably won’t profit as much if your home is in an unsafe part of town that is far away from practical needs. You need to think about things like, Is there a grocery store nearby? Can the tenants easily find restaurants, businesses, and public transit? Think about the things that YOU would want if you were living there.
Investment Potential
You’ll also want to look into the history of this specific rental property. Did the last owners put off necessary repairs? Was the house well taken care of by the previous tenants? Has this property been vacant for a while? Keeping these factors in mind can help you feel at ease knowing that this rental property is actually desirable for renters.
You’ll also want to check into the property expenses over the last year, and the profit and loss statements from the past few years. You will also need to make sure that the rent you charge will cover the mortgage as well as any unforeseen issues that may pop-up. It may also help to check out other rental properties in the area to see what they are charging their tenants.
If you already own a home and you’re interested in a rental analysis, then you should request your FREE rental analysis with us today. It only takes a minute to fill out the simple form and have your rental analysis emailed to you.
Unexpected Expenses
You always want to make sure your rent is enough to cover both planned expenses as well as unforeseen issues that you may not have anticipated. Unfortunately, rental properties often have more issues than a regular owner-occupied home. Some things to remember is that over time, you’ll need a new roof, the AC may need to be replaced, and the interior if the home may need to be updated.
Of course, bringing in a home inspector can give you a better idea on these large expenses before you purchase the property, and can allow you to be better prepared when these inevitable repairs need to be done.
Potential Tax Increase
“..but in this world nothing can be said to be certain, except death and taxes.” -Benjamin Franklin
Renting out property is considered a business, so you will need to report it when you file your taxes. Also, don’t forget about the property taxes. If you are renting out a home and own a home, it’s possible that your property taxes could double!
When you are calculating potential costs and fees with your rental property, be sure to include the extra taxes and factor this into your rent. While some of this may seem a bit overwhelming, the good news is, you have Central Florida property management experts at your disposal. If there is anything you think we can help one, we’re always available to help!
Sources:
The Motley Fool. “4 Things to Know Before Buying a Rental Property” Retrieved from: https://www.fool.com/investing/general/2014/08/02/4-things-to-know-before-buying-a-rental-property.aspx. June 16, 2018.
Investopedia, “Top 10 Feature of a Profitable Rental Property” Retrieved from: https://www.investopedia.com/articles/mortgages-real-estate/08/buy-rental-property.asp.
June 16, 2018.Money Crashers, “8 Issues with Buying Rental Property and Becoming a Landlord” Retrieved from: https://www.moneycrashers.com/five-issues-with-buying-rental-property-and-becoming-a-landlord/. June 16, 2018.
