A rental property is yet another money-making investment besides the usual stocks and bonds. Consider it if you’re all set to perform extensive research, geared with substantial financial commitment and how you take everything in harmony. To buy a rental property comes with lots of responsibilities but the reward is worth it including maintenance and all.
- Carefully assess your fiscal goals and requirements. Ask if you need a steady flow of income from your rental or do you care to sell it for profit in a couple of years. For the latter option, consider a low priced property that you can easily fix and maintain while letting.
- How about being a resident landlord by procuring a multiunit property and live in a single apartment! In most cases, income from other unit(s) would cover the mortgage payment ensuring you live a free and peaceful life. Moreover, being on-site has many other advantages such as you can always keep an eye on the property to make sure it’s well maintained.
- Are you skilled enough to work over general maintenance yourself? You need proper equipment and a lot of patience to deal with upset tenants and perhaps mend the toilet before sunrise. If you partner with a property manager or a real estate management company, around five percent of gross income would go to them as service charges.
- Choose the type of property you want for it’ll impact the entire deal. Single-family homes are usually economical that full-scale apartment complexes however they generate less income. Apartments on the contrary may require frequent maintenance that may turn quite hectic.
- Get preapproved for mortgage as financing investment property is different from residential as it requires a much greater deposit.
- Fish out lucrative properties; newspaper and most importantly internet are valuable resources. If you’re new to it, find a real estate agent having expertise in commercial and revenue generating properties.
- Choose property where people actually want to live! The place must be close to general amenities such as grocery shops, parks, schools, a peaceful and well-kept neighbourhood. Determine if there’re any restrictions over rent with homeowners association. Remember, there’s nothing worse than owning a rental property but no renters to settle in!
- Consider what improvements you’re willing to make. Purchasing a rundown property for less isn’t always smart as all the repairs and preservation may bleed your pocket dry. So, before you buy, consider the budget and estimate all necessary fixes! Have the property inspected and identify fair market value.
- Don’t overlook historical facts of the rental property such as tenants that settled in earlier, how much return it gives even after you transform the entire thing into rentable condition.
- Spend some time and money over advertising and interview potential renters. Exercise a contingency plan if unit remains vacant for sufficient amount of time.
- Find out the competitive rental rate by querying the rental agents, review listings and personal visit to the units.
- Gauge total income and make sure it’s sufficient enough to cover the entire cost of owning and preserving the property.
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