Rental properties make for great investments, but they’re a business venture you shouldn’t enter into lightly. While American Loans is happy to handle the mortgage for your rental property, we also want you to be well-informed on where your money, time and energy are going. Learn what you should bear in mind while seeking out rental properties.
Location Is Still Key
Just as the location of your primary home likely played a large part in your decision to scoop it up, the same applies to your rental property. In terms of attracting tenants, you want a property found in an area that has a low crime rate, is located near desirable amenities, nestled in a location where there are other rental properties and has a value that is likely to increase over the years. Not only does the location have an impact on the overall success of your investment, but the quality of your tenants as well.
Give Strong Consideration to Overall Cash Flow
As you’re simmering on your options, be sure to think about overall income potential, the value of the purchase, rental income and the expenses you’ll likely incur over the course of owning the property. Find out if the property has a stable rental history, the monthly amount the current tenants pay and the property’s expenses for the last year. The information you uncover helps you decide whether the property is truly a good investment or a waste of resources.
Just as there are unexpected repairs in your primary residence, the same is true of rental properties. While you can set aside money for these repairs, you can also take steps to avoid them. Specifically, be sure you maintain the HVAC system, roofing, floors, exterior and plumbing system. Routine inspections go a long way in avoiding disasters and unhappy tenants.
Think both long and short term when it comes to any investment. Just because real estate makes for a good use of your hard-earned money, it’s not without its avoidable pitfalls.