Rental properties can seem like a great idea. Once you have bought a few and repaid the mortgages it is possible that you can live off the relatively passive income. Of course, that’s not the only way of making money from rental properties.
However, while the idea is good it can seem daunting to know where to start. Fortunately, this guide to buying rental properties will make it easy for you.
Consider your goal
In most cases, if you’re looking to buy rental properties then you are hoping to rent them out and raise enough funds to purchase the next rental. It takes time but you can build up a portfolio.
However, you can also buy the house, prepare it for rental, and sell it. This is generally referred to as flipping and can be lucrative, providing you get the property at the right place and keep renovation costs to a minimum when selling or leasing a condo or a house.
If you’re looking to buy to rent then you need to decide if this is a one-off or if you are hoping to get more properties.
As with any property, location is the key. This isn’t about where you would like to live. You need to find where to buy investment property that your tenants will like. That means near facilities, schools, and shops.
Finding the right location s critical if you want to rent the property easily. That’s why you need to take your time with this stage.
Of course, to purchase a rental property you’re going to need money. While there are mortgages designed for this purpose, you will still need a deposit to get you started.
You can find a deposit by releasing equity in your own home or by saving up funds. It may also be possible to create a company and borrow the necessary deposit as a business loan.
You’ll want to talk to specialists to help you choose the best solution. It should be noted that equity is always a good choice as this will quickly create equity in the rental property, allowing you to buy more rental properties
Rental properties don’t generally create a huge income, at least until the loan is repaid. But, they also don’t need a lot of input. You will need to find tenants, pay for the necessary safety tests on the property, and you’ll have to deal with any maintenance issues when they crop up. Alongside this, you need to arrange to collect the rent.
You can handle all this yourself, hire someone to do it, or use a property management agency. It’s important to decide which is your preferred option before you start renting.
Don’t forget you’ll also need insurance and there may be an array of other costs that crop up, such as paying the mortgage when the property is vacant. In other words, it’s a good idea to have a contingency fund to help you deal with any issues and make sure your rental purchase is a sound investment.