Very few people are lucky enough to call themselves homeowners. Even fewer are able to own a rental property. Collecting rent from a tenant each month can be a great way to build wealth. But it is not as simple as it seems. Here are some things you need to know before you purchase your first rental property.
What’s the Rental Property Market Like?
Before buying a rental property, do your research to find out what the market in your area is like. Determine if the investment is even worth it. If this is your first rental property, consider purchasing in your immediate area as you are likely more familiar with its economic outlook.
While there is a mortgage bonus that comes with purchasing a rental property, you’re still going to need to secure the 20% down payment. Even more important, consider the possibility that a tenant might skip out on rent or a major repair needs to take place immediately. Make sure you have enough money set aside in the event that all of these things occur at once.
Figure out Expenses
There is much to consider when renting out a property. Think of the HOA fees, repairs, taxes, property management expenses, these must all be accounted for. How will utilities be handled? And can you cover all of these fees in between renters?
Who’s Going to Manage the Property?
This is an important step to consider. Are you going to want to want to be the landlord or are you going to hire a property manager? Being a landlord means you’re going to have to be available 24/7 in the event of an emergency and you’re going to have to deal directly with potential evictions. On the flip side, hiring a property manager can be costly.
Owning a rental property can be extremely rewarding, but it is not without its challenges. There are a lot of factors one must consider in order to be successful.
To learn more about investment properties and other Henderson real estate options contact the Gore Group Realty team today.