Are you planning to invest some money in a residential rental property? This is a very good time to invest in real estate because the industry seems to be in an upswing, recovering from really low prices. While the price of the property you purchase is indeed very important, there are many other things that you have to consider in order to ensure that the deal is profitable in the long term as well as short term.
Keep the following tips in mind when buying real estate for renting out:
- What is the amount rent you can expect? You need to be assured of a rate of return that is at least more than the rate of interest offered by banks. Certain types of properties will offer you better returns than others but they might also cost more. A related factor is whether the property will continue to give returns over a long time.
- What will your expenses be? As the owner of a residential property you will have fixed and variable expenses to deal with. While fixed expenses such as taxes and insurances have to be dealt with on an annual basis, you'll also have to deal with major repairs from time to time. Plumbing, electrical, tiling work etc. are your responsibility and not the tenants (as long as the problem has not been caused by the tenants). If your property is not well maintained that you will have a tough time attracting tenants or even getting the right kind of rent from them.
- Will you find it easy to get tenants? No matter how much money you pour into your real estate venture you will only be able to get the desired returns if you find the right kind of tenants easily. The location of the property is an important factor here since potential renters will assess the accessibility of the place as well as the nearby amenities such as schools, hospitals etc. People will also want to know if the place is a crime-free area.
You need to examine all relevant factors before investing your hard earned money in real estate. This is a really great way to make money as long as you eliminate all risk factors and work to highlight the strengths. One of the simplest things to do is take advice and assistance from an experienced realtor before buying a place to rent out.