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Owning Rental Property
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Many people today are intrigued with
the idea of owning investment real estate. It sound like an awfully
simple way to make money: Owning property, renting it out to tenants,
and collecting rent payments. The truth is, it can be an extremely profitable
venture, or it can be a train wreck.
An individual who is purchasing rental property for the purposes of
income has a long road ahead of him, and he should be involved every
step of the way to ensure that his investment turns out in the end.
The first step in figuring out if you're ready to own investment property
is to ask yourself how much money you have to pay up front. Buying your
own home can require costly down payments, but investment properties
generally require that plus much more. You may very well have to come
up with not only the down payment on the property, but also the cash
needed to bring the place up to code and rental standards. There are
different standards for a rental property than for a private home. Unless
the place you purchase has been a rental before, expect to be shelling
out quite a bit of cash upfront.
Keep in mind, there are loans available for those buying rental properties.
But rates and terms for investment real estate loans are harsher than
those for private homes, since lenders believe there is not as much
emotional investment for the borrower, and so their loan is more at
risk. Explore your options and check into a few different lenders, trying
to get the best loan rates you can. It may not be easy, but if you are
not planning to back down from the task, you will not be wasting your
time.
Once you manage to get your property renovated and you're ready to go,
you'll face the issue of finding good tenants through the screening
process. You can certainly hire a property manager to help you out here,
as well as to deal with repairs that come up later, but most small landlords
are much better off doing this process themselves. Screen tenants carefully
and don't let emotional involvement get in the way. Set some standards
regarding credit reports and income, and stick to them regardless of
who walks in your door.
Don’t expect to make a profit at first. Your rate of return is going
to be small, even if you have done the math and figured out your rent
cost as carefully as possible. Also prepare yourself for unexpected
repairs which are going to bring down your profit margin and require
some work on your part. The first three years of a rental property are,
typically, the shakiest. If you're committed to being a landlord, you're
not afraid to roll up your sleeves, and if you're planning to stick
with it, you can reasonably expect a decent profit at some point in
the future.
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with real estate; visit
http://real-estate.online-business-idea.com
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