Buying a rental property is often one of the best things that first time home owners can do. They will often live in one of the units, and rent out the other units of the home. There’s many things to consider before you buy a rental property. Here, we’ll break down the good and the bad of being a landlord and owning your very own rental property. We’ll also show you the steps that you should take before you sign on the dotted lines.
Gather As Much Information As You Can
Before you make the decision to become a landlord, gather as much information as you can. Talk to people who are landlords and who own rental properties. See how people feel about living in their own rental properties. You can also read and research as much as you can on the topic for a broad perspective.
Consider If You’re Ready To Be A Landlord
There’s so many things to consider when it comes to buying a rental property. One of the biggest things to think about is if you truly are ready to become a landlord. There’s a lot of responsibility in being a landlord. Also, you’ll need to be prepared to deal with tenants and various problems that may come up with the property. Before you make the leap to becoming a landlord, think long and hard about how you’ll handle the responsibility and time commitment.
Make Sure You Have Plenty Of Cash On Hand
To purchase a rental property, you’ll need to secure a sizable downpayment for the mortgage. It’s also important that you have a reserve of cash ready for repairs that may need to be done around the building before it can be rented out. You’ll most likely need to spend some money first before you start making money on your rental property.
Decide If You Want To Live On The Property
For first-time homebuyers, purchasing a rental property and living in it can be a great decision. You’ll save on your monthly mortgage all while building your own capital. While you don’t always have to live on site when purchasing a rental property, it’s a great financial option to consider.
Think About Hands-On Management
While you may decide to pay someone to manage your rental property, you may need to deal with all aspects of your property yourself at first. Part of the job will include dealing with tenants as well as scheduling and assessing repairs. You should estimate that about ten percent of the rent that is collected will go towards these purposes. As a landlord, you’ll also need to be sure that the tenants you house are dependable and that the building is in the best shape it can be in.