Things to Consider When Buying a Rental Property


Written by Jenny Mango in Real Estate
Viewed by 174 readers since 01-10-2009

Investing in buying a rental property could be much more profitable than investing in the share market. Before you decide in buying a rental property, you should take a look at the financial commitment that plays an important role in maintain the property. Although, a certain amount of risk is there in every investment, investing on a rental property bears less risk.

What Are the Essentials?

  1. Decide upon the financial commitment you are going to make. Plan how you would like to use your rental property. You can either have a steady flow of income from the rental or you can sell it at a profit within a few years.
  2. Decide on the type of property you want to buy and consider their privileges and risks as well. Single houses are generally less expensive but provide you less income. On the other hand, apartments and flats could be costly but they give you more returns.
  3. The location of you rental property is a vital aspect. A proper habitat and neighborhood could keep your rooms filled with renters. A rental property with a lack of renters would be the worst case.
  4. If you want to do the maintenance yourself, its fine. Otherwise, deduct a percentage of income from your total rental.
  5. Do not forget to check out the rental rates of the present residents, if any. Get an idea about the previous rental records of your property. You might not get the rental that you wish to.
  6. Analyze the condition of the property you are going to buy. Fixing an old property could make holes in your pocket. You could even have to sell it with huge losses.
  7. Lastly, make an approximate calculation to get an idea about your profits. Take a look at your capital and decide a profit margin that you want to keep.

Think in a New Way

Think about the economic condition in your state. The per capita income is an important factor in this case. Do not buy a palace like estate. There could be many problems with that. Lack of proper maintenance could be a big problem. You should not also expect that people with lower per capita income could be renters in your estate. The fact is that there is always a way to make money from any property. It depends on your knowledge and skill to derive money out of your property.

A Few Dos and Don’ts

Always have a backup capital before buying a property. Today’s market conditions are very unstable. Take a look into the future before buying. Relying on quick profits could lead you to a bigger trouble. When you try to make quick profits, it’s natural that you have to take the maximum risks. The more risks you take, the more are the chances of running in loss.

To be successful in buying and maintaining a rental property, you must have patience. Hurrying too much can have inverse effects.


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