Everything You Should Know About Rental Properties
Whether you're interested in investing in or managing rental properties, you can learn all about rental properties here.
According to the US Department of Housing and Urban Development, there are about 48.5 million rental units in the United States. When you are interested in buying a rental property and becoming a property manager, it can seem like an exciting prospect.
However, there are many aspects of rental property management that many people don't know about. Do you want to learn more about rental properties? Keep reading this guide for everything you should know about rental properties before you make the investment.
Consider Income Potential
One of the first things you should consider when buying a property investment is your income potential. How much money can it provide for you? If you are making a huge investment in a property with little return, it can significantly damage your financial prospects.
One way to make sure your income potential is great enough is to calculate the monthly revenue you will receive from your tenants. This revenue each month should cover 1% of your property value.
So, if you buy a less expensive property, you will not need as much rental income to cover your mortgage. However, if you buy a larger apartment complex, you will need to have more tenants or charge higher rent to earn enough money.
You can also use a mortgage calculator to estimate your monthly payments.
Are You Ready to Be a Landlord?
Next, you want to consider whether or not you are ready to be a landlord. While there are many benefits of being a landlord, there are also a lot of difficulties. You will have to deal with difficult tenants, issues with your property, and more.
If you feel like you are not cut out to be a landlord, you can still invest in a rental property. However, you will need to hire a property manager to take care of all your landlord duties. Make sure your income potential will be enough to cover the cost of a property manager.
Find the Right Location
Having a successful rental property largely has to do with the location. If you buy a rental property in a bad area of town, you may not have to spend as much upfront. However, you will likely have a difficult time finding tenants and it will be harder to pay your mortgage.
You want to find a rental property in a location with a growing population and a revitalization plan. This will make your rental property a better investment.
Depending on the type of property you are buying, you want to make sure it is in a good location for your tenants. For example, if you are renting your property to college students, you want to make sure it is close enough to the college campus.
If you are renting to families, make sure you find a rental property that is close to a school district and has a low crime rate. Choosing a great location for your property can help your rental property increase in value and be a better opportunity.
Understand Unexpected Costs
When you own a rental property, there will be a lot of unexpected costs that you should factor into your budget. Even if you can afford a down payment on a rental property, you need to make sure you can afford the maintenance and upkeep costs.
For example, if you need a new roof on your property, this can cost you several thousand dollars. Be prepared for unexpected operating expenses!
You also want to consider other factors. For example, if you are renting to students in a college town, it may be difficult for you to find tenants when school is done for the summer. If you do not have tenants, you will not be earning as much as you should be.
Make sure your finances are in order and that you are prepared for these unforeseen events!
Find Properties that are Ready to Rent
While finding a rental property that is a fixer-upper may be less expensive upfront, you will have to spend a lot of money to get it ready for your tenants. Rather than spending a lot of time, money, and effort to fix up a rental property, you should find properties that are ready to rent!
This can save you money in the long run. Fixer-uppers cost a lot of money in materials and labor. Plus, you will not be able to have tenants until the renovations are complete.
This means that you will be paying your mortgage out of pocket until you have renters move into your rental unit.
Create Strong Contracts and Leases
Creating a strong contract or rental agreement with your tenants is vital when you are renting out an investment property. Without a solid lease, your tenants may find loopholes and can take advantage of you.
Some common things that you should include in your lease are whether or not your property allows pets, how much tenants need to pay for rent and other fees, and more.
Meeting with a lawyer can help you create an airtight lease that will prevent problems from coming up in the future. You also need to make sure each of your tenants signs the lease before they move into your property.
Find Rental Properties For Sale Today
If you are interested in investing in rental properties, there are many things that you need to consider. While it may seem like an easy job, becoming a property manager takes a lot of work. Before buying a property, it is important that you consider each of these factors to make sure you are prepared.
If you are looking for properties for sale in Fulton County, PA, Palmer Realty can help! Contact us today to find an agent and to learn more about the rental properties available.