October 19, 2012

Tips for Buying a Rental Property


8 Tips for Buying Rental Property


  1. Be sure your personal finances are in order. Never buy a rental property if you don’t have a healthy emergency fund. Remember that you’ll be responsible for mortgage payments and repairs even if there is no tenant.
  2. Get preapproved for an investment loan. Sit down with a mortgage lender or broker to find out if you can afford to make an investment before you spend a lot of time searching for a property.
  3. Research going rents. Ask real estate agents, property managers, or other renters in the area how much you can realistically expect to charge for rent.
  4. Buy properties in good locations. The quality of the neighborhood is important for keeping good tenants. Take a look at the proximity to employers, schools, parks, and public transportation. If you plan to manage a rental yourself, be sure that it’s fairly close to your home.
  5. Make purchase offers contingent upon inspections. Always pay to have professional inspections made so you can determine what repairs may be needed and if there’s evidence of pest damage.
  6. Get ample insurance. You need to have plenty of liability insurance to protect yourself in case someone is hurt while they’re living in or visiting your rental property.
  7. Know the rules. There are federal and state laws regarding rental property that you must not to violate. Visit nolo.com for information about the landlord-tenant laws.
  8. Consider the services of a property manager. After years of managing my own rental properties, I turned them over to a professional. Even though a property manager charges around ten to fifteen percent of the gross rent they collect—to me, it’s well worth it. If you want to circumvent all the hassles of managing a property, be sure to add the expense of a professional manager into your calculations before you decide to buy a property.

Speak with a Mortgage Specialist to discuss any questions
Contact US Mortgage Corporation toll free: 1-800-562-6715

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