Buying a rental property can be a rewarding investment idea as it’s a good source of long-term income. This type of investment can be daunting, but as long as you do your research and make the right decisions, you’ll be more confident in acquiring your rental property investment.
Here are a few considerations in choosing a rental property:
Find the Right Location
It’s more convenient to look for a property where the population is growing as it presents a potential investment opportunity. Choose a location with low property taxes, good amenities, a decent school, malls, and more. Also, there are many potential renters in a neighborhood with access to public transportation and low crime rates.
Location is a constant. Once you’ve invested in a property, you’re stuck with it unless you sell the house, so be careful choosing your property location. Also, location determines the supply and demand. Avoid places with too many rental properties available or a place with only a few tenants. Make sure to opt for a location with high demand and reasonable supply.
For first-time investors, you can seek assistance from good real estate companies like The Albright Team to provide you with credible information and ensure a smooth transaction. They have the experience and profound knowledge of the local market, so you’ll have expert advice.
Invest in Landlord Insurance
Secure landlord insurance to protect your investment. It covers lost rental income, property damage, and liability protection if your tenant suffers an injury due to maintenance issues in the property. A landlord insurance policy covers the following:
- Liability Protection: This includes legal or medical expenses if a visitor or tenant is injured because of maintenance issues like water leaks, a damaged staircase, or icy pavement.
- Property Damage: It covers damages from fire, vandalism, or natural disasters. It also covers personal property like furniture or kitchen appliances that are for tenant use.
- Lost Rental Income: If your property becomes uninhabitable due to mold growth or rat infestation, the policy will provide temporary reimbursement to cover your lost income.
Opt For Single-family Homes First
Single-family homes are one of the simplest ways to get started as a landlord. The maintenance will be easier than a multifamily property as there won’t be as much wear and tear with a single tenant. Most tenants also prefer them because they’re more spacious, have increased privacy, and feel like home more than a rental unit.
Families with school children usually opt for single-family homes as they aim to stay put. Changing schools can cause a huge disruption, so they prefer a place near their preferred school. Also, there are amenities like garage parking and washers that are not available in other rental options.
Screen Potential Tenants Thoroughly
Screen your tenants to ensure that they will take care of your property. Avoid negligent people and unpleasant situations by making a list of the qualities you like for an ideal tenant before approving any of them. Run background checks and make sure they have a good credit score to evaluate their timeliness in paying rent. Double-check their application to avoid someone with a questionable history.
The Benefits of Becoming a Landlord
Landlords may have lots of responsibilities on their shoulders, but managing a rental home pays off, especially if you start to see returns on your investment. Earning this passive income is a good way to save for something big, like a grand vacation or retirement. Some benefits of being a landlord include:
Extra Passive Income
A well-managed rental property is a good source of monthly income that requires minimal effort as long as the tenant pays on time. It practically runs itself, especially if you have budgeted and pre-scheduled maintenance.
Rental Homes Pay for Themselves
One of the advantages of rental homes is they directly pay for themselves. Your tenant’s rent covers the mortgage and other expenses, and the extra serves as your income.
If your rental home is kept well-maintained, it will continue producing income for a long time. If you won’t be able to watch over it, you can leave it to someone in the family to continue the management.
Set realistic expectations when looking for your rental property. Just like any other investment, it won’t produce a large profit right away. Consider working with an expert so you’ll avoid going for the wrong choice that can lead to a huge mistake. Make careful decisions to reap the long-term benefits of your rental property.