A rental property can provide you with a passive income to help pay for the cost of the property, especially when you get it for a great deal and rental rates in your area are strong. But before you go out and buy a rental property, be sure to follow some recommended tips to ensure your rental property is a success as an investment. Here are some recommendations to help you buy and manage a successful investment property.
Consider the Property Condition
As an investor of real estate, you want to find a property that is going to pay out more than you have to put into it. And sometimes this means you can find it within a property that is in poor condition. A property that needs to be rehabbed or needs some remodelling to clean it up and make it habitable will usually sell for a discounted price. Then, the money you put into its repairs or the work you complete to get the property rental-ready may be less than the increase you get out of the improvements.
So, for example, perhaps you buy a rental property duplex that needs to be gutted and you buy it at a discount of $120,000. The property needs about $80,000 in repairs to get it into great shape, but once the improvements have been made, it will have a market value of $270,000.
On the reverse, you can buy a property that is in good condition but is older so needs some extra regular maintenance to keep it working as a rental. This type of property may sell for a bit more but needs less upfront, and you can begin to rent out immediately. Another rental house may be immaculate and ready to rent out, but it may cost you a premium to purchase, but because it needs no extra work, it is virtually a no-maintenance rental. Decide how much work you are willing to put into a rental property as you look over the market and choose one that you are prepared to handle.
Either before you buy a rental or after you have already purchased it and started looking for tenants to rent, you can choose to hire a property manager. A property manager is going to handle all the tasks with managing your investment and can take time to complete tasks that you may be too busy to handle.
However, sometimes it can be a good experience to take a hands-on approach to your rental property and manage the rental. If, for example, you buy a duplex where you live in one unit and rent out the other, you can be on-site all the time and better manage the property. Your tenants are also going to be less likely to give you issues or cause problems because they know you live next door to them.
To learn more, contact a company like Lucror Property.Share