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| Owning Rental Property |
Many people today are intrigued with the idea of owning
investment real estate. It sound like an awfully simple way to
make money: Owning property, renting it out to tenants, and
collecting rent payments. The truth is, it can be an extremely
profitable venture, or it can be a train wreck.
An individual who is purchasing rental property for the purposes
of income has a long road ahead of him, and he should be
involved every step of the way to ensure that his investment
turns out in the end.
The first step in figuring out if you're ready to own investment
property is to ask yourself how much money you have to pay up
front. Buying your own home can require costly down payments,
but investment properties generally require that |
plus much more.
You may very well have to come up with not only the down payment
on the property, but also the cash needed to bring the place up
to code and rental standards. There are different standards for
a rental property than for a private home. Unless the place you
purchase has been a rental before, expect to be shelling out
quite a bit of cash upfront.
Keep in mind, there are loans available for those buying rental
properties. But rates and terms for investment real estate loans
are harsher than those for private homes, since lenders believe
there is not as much emotional investment for the borrower, and
so their loan is more at risk. Explore your options and check
into a few different lenders, trying to get the best loan |
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rates
you can. It may not be easy, but if you are not planning to back
down from the task, you will not be wasting your time.
Once you manage to get your property renovated and you're ready
to go, you'll face the issue of finding good tenants through the
screening process. You can certainly hire a property manager to
help you out here, as well as to deal with repairs that come up
later, but most small landlords are much better off doing this
process themselves. Screen tenants carefully and don't let
emotional involvement get in the way. Set some standards
regarding credit reports and income, and stick to them
regardless of who walks in your door.
Don't expect to make a profit at first. Your rate of return is
going to be |
small, even if you have done the math and figured
out your rent cost as carefully as possible. Also prepare
yourself for unexpected repairs which are going to bring down
your profit margin and require some work on your part. The first
three years of a rental property are, typically, the shakiest.
If you're committed to being a landlord, you're not afraid to
roll up your sleeves, and if you're planning to stick with it,
you can reasonably expect a decent profit at some point in the
future.
About the author:
Kirsten Hawkins is a real estate expert from Nashville, TN.
Visit http://www.king-of-real-estate.com/ for more information
on real estate, mortgages, and finding the house of your dream.
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