Friday, December 6, 2019 / by Harvey Rosenberg
Think Long TermBuying a rental property won't net income immediately. In fact, it may seem as it's costing you more or you're breaking even. However, long term, real estate is an investment. Even if you're breaking even cash-wise, you're building equity and appreciation into the home. As you pay down the principal over the years, your cash flow will increase.
Landlord or Property ManagementDecide upfront if you want to be on call 24/7 or hire a property manager. While you can expect a portion of your rental income, typically around 10%, to go to a property manager, it may be worth your time. Managing tenants take a lot of time and effort and if this is your first time out, it may take you more time and money. A property management team can take care of everything from finding tenants to home maintenance.
Know the LawHaving a rental property is more than finding someone who wants to live there and agreeing to terms of rent. You need to know equal opportunity housing and application laws, as well as ADA compliance laws and financial responsibility laws. This again is where a property management team can come in handy. A property manager is licensed, deals with the laws daily, and will keep up on any changes. Make sure your property manager is associated with a lawyer for those reasons as well.
Just like owning and living in the home, you can expect that something unexpected will occur. Make sure you're setting aside some of the renal income for upkeep, maintenance, and emergencies. You wouldn't want to end up in a legal situation because you couldn't afford to fix a broken air conditioner in Florida.
Additionally, decide how you'll finance the rental property upfront. Do you want to pay cash or take out a mortgage? From Bankrate, a mortgage might be the best option:
Want to know more about purchasing renting out a property? Contact our property management team here.