If you wish to be a careful rental property owner, then you must consider the rewards and risks of investing in a rental property. The real estate market has allowed us to live like a king in our dream home, all by bestowing many ways to owning a property.
Whether you are purchasing or renting a home, experts agree that one must consider different factors before buying a property on rent. From down payments to the property’s location, there are multiple factors to consider for a wise buying decision.
Surf through this list of some essential factors when buying a rental property for your family –
Hack 1 – Are you the complete landlord of the property?
There are times when the seller gives away the complete authority of the property to the rental owner. However, it may give you the liberty of getting the repair work done in your way, but at the same time, it may cost you additionally. Therefore, if you own more than one property, it’s a good idea to hire a professional for repair work. Otherwise, try to avoid rental homes where you may have to act as the complete owner of the property.
Hack 2 – Safeguard the down payment
Generally, the investment properties demand a larger down payment as of owner-occupied properties. Why? Because they do not have random approval needs. You require at least 20% of the down payment as mortgage insurance is not a legit option for rental properties. However, you may be able to seek the down payment through a financial institution in the form of a personal loan.
Hack 3 – Surf the right location for yourself
This is one of the significant factors where most homebuyers are stuck and see themselves in a dilemma. When choosing rental homes, one must evaluate the property based on the convenience available around. Some standard amenities include – restaurants, parks, hospitals, theatres, schools, and much more. Additionally, look if you have enough public transportation facilities and growing job opportunities or not.
Hack 4 – Calculate the overall margins
Most Wall Street companies buy distressed properties intending to expect a return of 5 to 7%. This is because they need to pay the staff salaries besides the everyday commercial expenses. Here, the individuals must decide on a goal of at least 10% in return. Keep the maintenance cost as 1% of the overall property’s value. Some other expenses include – property taxes, pest control service charges, regular maintenance, insurance, association fee, and much more.
Hack 5 – Go for a low-cost home first
If you are new to this experience, prefer a low-cost home that may help you avoid the overhead costs associated with the property. Plus, such properties come with a better exterior appearance.
The last word
Renting a property may sound like a much lesser hassle, yet it’s essential to be careful at every point. There are many factors to consider to ensure it is a wise buy. Here, your real estate agent can assist you in all manners giving you sound advice at each step.