One of the best ways to learn how to invest money is to make some mistakes down the road from which you will learn. But the only problem with making mistakes in real estate can be really costly even if it’s small. So here are things that you need to know before buying rental property.
Your Property Taxes Will Spike
One thing that nobody will tell you is that owning a rental property will come with a huge spike in your taxes.
Most are unaware that the property tax is almost a full presence point higher than your primary residence is.
In the first year you are most likely not going to make money off renting until you adjust your rent depending on all the taxes and utilities.
You won’t necessarily lose the money you will just be at a flat line until you figure out all the financial aspects.
You Will Need Some Help Finding Tenants
Even though there is no shortage of tenants, if you are new to the whole spiel you will need some professional help in order for the word to spread.
It’s important that you hire trusted professionals like those found at Hutton & Hutton that will help you get to the top and find the best tenant.
You don’t want to let just anyone move in and rent out your property, you will want someone who will keep it nice.
Figure out if you are looking for a tenant that will be there long-term or people to come and go. It is all up to you.
It is in your best interest to find a tenant that will pay their rent every month on time and take care of the place like it’s their own.
Tenants Can Do More Damage Than You Realize
No matter if you are renting out your property or even interested in doing so, you have heard some pretty bad horror stories of people’s properties being demolished by their tenants.
Unfortunately you can think that that will never happen to you. You will have to be prepared for the worse, because you can never know how people will act, even if they seem nice.
Sometimes the people who seem the nicest will leave the apartment in worse condition than the ones that you doubt in.
You Will Have to Be Constantly Involved
You have to be aware that once you have bought your rental property you will have to constantly be involved when you become a landlord.
But there are so many benefits that it is worth every single moment spent on it. Being a landlord will need to be a responsibility that you will add to your daily life.
You will need to stay on top of repairs, maintenance, collecting rent every month and making sure that everything is fine with the tenant and the property.
The hardest thing you will face is keeping an eye on your tenants’ housekeeping skills because you want to have as little wear and tear on your property as you can.
You can’t expect your tenant to keep the property like it’s not been lived in, but it is important that they are aware that you won’t tolerate them causing even the slightest damage to the property.
Sometimes that will require you to have uncomfortable discussions and you must be prepared for that.
You Will Need to Prepare the Property for Tenants
When you are looking into buying a rental property you have to be aware that you just can’t buy it and rent it out.
You will need to make sure that it can be a home to someone who will choose to live there. Tenants are attracted to places that are trendy and their expectations will be high no matter how low or high their budget is.
You will have to make sure that the property that you want to rent out has appliances that are working and that the property is clean and prepared to be lived in.
You have to be aware that owning a rental property is more than just a financial investment. It will require you to invest time, emotion and energy into it.
Therefore, you need to take time and carefully think through the idea, because it will be like a second job.
Maggie Holmes is a passionate blog writer who is extremely keen on writing about renovation and design. Her exclusive hobby is to surf the net to find amazing articles that can inspire her with some fresh ideas for article writing. She loathes being a common person who wastes her time. Follow her on Twitter.
- Some Pros and Cons of Using a Real Estate Agent (for Sellers or Buyers)
- 7 Companies Like Divvy Homes (Alternatives) for Rent-to-Own a Property
- The Most Important Factors for Real Estate Investing
- 13 Opendoor Competitors – Best Companies Like Opendoor to Sell Your Home
- What You Need to Know About Luxury Apartments in 2022
- 38 Interesting Real Estate Fun Facts and Statistics You Should Know
Alice Carroll says
You made a good point that constant involvement with maintenance and other things to manage would be a key component when thinking about buying rental real estate. I’m planning to to build up my retirement fund using passive income from rental properties because the money comes in steadily and predictably. Perhaps I should also hire a property manager to help me out once I buy more properties than I can handle in the future.