In the United States, there are close to 49 million rental units. While rental units can be a great investment, there are some things that you need to consider before making such a big purchase.
Do you want to learn more about buying a property to rent, finding a property manager, and more? Keep reading this guide for everything you need to know!
There Are Other Fees to Consider
When people decide to invest in rental properties, it seems like a very straightforward way to earn money. However, many people wrongly assume that besides their mortgage, there are not many other costs to owning a property.
When you own a rental property, you are in charge of many maintenance and yearly fees. For example, you will need to have landlord insurance to protect your property and to protect your rental business. You will also need to pay for repairs, maintenance, and even advertising costs to find tenants to rent your space.
If you choose to pay a property manager for property management advice, you will also have to pay them a monthly wage that will use up some of your rental earnings.
You Can Make Passive Income
While there are other fees to consider when you are renting property, it is still a great job if you want to make passive income. Real estate is an investment that keeps on giving. Once you pay the major downpayment and the regular fees associated with your property, the rest of your rental earnings will be income for you.
Especially once you have completely paid off your mortgage on your rental property, you can have passive income for the rest of your life!
Being a Landlord Is Not an Easy Job
Next, you need to realize that being a landlord is not an easy job. You cannot simply hand over the keys to your tenant and call it a day! Instead, you are constantly on the clock. If there is an emergency at your rental property, you may have to take care of this in the middle of the night!
You also have to deal with unreliable tenants, filing evictions when necessary, and regularly communicating with your tenants. As was mentioned before, there is an alternative to being a landlord when you own a rental property.
If managing your property seems overwhelming, you can leave that job to a property management company. While you may not want part of your monthly income to go to someone else, it can save you a lot of time and stress to find another person to manage your rental property.
You Need a Higher Down Payment
When you are buying any type of real estate, you need to make a down payment. This is because it reduces the risk of the person or institution lending you the money.
While you can make a down payment on a home with as little as 5%, rental properties generally require a higher down payment. In fact, some lenders require at least 20% of the total cost upfront.
You may also find that you have to pay a higher interest rate with a rental property than you would with a primary residence. If you already have plenty of money saved up for your real estate investment, this should not be an issue!
Location Is Key
Although real estate is a great investment, your return will largely depend on the location of your rental property. Having a great location for your property will make it easier to find tenants and will ensure that you can make more money.
For example, if you own a rental property in an affluent area, it is likely that you will be able to charge your tenants more for their monthly rent. You will also make more money if your rental property has no empty units.
For example, if you live in a dangerous area of town or if you have a rental property that is far away from any grocery stores, schools, or other amenities, you may find that it is harder to find tenants. Make sure you find a great location for your rental property so you can fill it up more easily!
You Can Pay the Mortgage With Rental Income
Finally, a huge benefit of buying a rental property is that you can pay the mortgage with the rental income. After your initial down payment, you will not have to worry about making out-of-pocket payments.
As long as your reaching your maximum income potential, your tenants will be paying your mortgage for you and helping you fund your investment for years to come.
This is why real estate is such a great investment, even if you cannot afford to buy a rental property on your own!
Find a Property Management Company to Help With Your Property to Rent
Owning a property to rent can be a fulfilling way to invest and earn money. While there are some simple parts of this type of investment, it can also take a lot of time and money. To make your investment property less stressful, you can consider hiring a property management company to take care of the day-to-day tasks on your property.
If you are looking for property management in Charlotte, Gastonia, Concord, Fort Mill, or other surrounding areas, Bottom Line Property Management can help! Contact us today to schedule a consultation with our property management experts and to see how our team can help you!