At a time when the real estate market is down, it’s easier to buy property than it is to sell it. That leaves investors wondering if they should make the leap and become a landlord. Opening your real estate investment up to tenants and making it a rental property can be just as lucrative as flipping houses. There is just as much risk, however.
The Benefits of Renting Out Real Estate Investments
The nice thing about renting out your properties is the tax break you’ll get. Landlords are allowed extra deductions for expenses and depreciation of the home and appliances. You can deduct the interest on your mortgage, your property taxes, the cost of repairs, any cleaning services you use for the house and the utilities.
Consider These Tips Before Renting Out Your Property
There are some things to think about before renting out your property. Landlords have a huge responsibility and a certain level of liability. Knowing what you are signing up for upfront will save you a lot of hassle down the road. Consider these seven points before you make any decisions.
* Is renting out your real estate investment a financially feasible option? Can you get enough in rent to cover your mortgage, property taxes, insurance and repairs? Carefully calculate how much money will be needed on a monthly basis to cover your expenses and make a profit.
* Is there a demand for rental homes in the area? Some areas are filled with rental homes, while others hardly ever have them. Every neighborhood is different. Do your research and find out which other homes in the area are being rented out.
* Remember that you will be responsible for all repairs on the house. This goes beyond sprucing it up for the next renters. Renters will call all hours of the day and night with various problems they want you to fix. If you aren’t handy around the house, it will cost you more to hire someone to handle these kinds of repairs.
* Are you willing to be a landlord and handle issues with tenants? Are you firm enough so they won’t walk all over you? Do you have what it takes to kick out tenants who aren’t paying? Being a landlord takes patience and people skills.
* Make sure you have your real estate investment thoroughly inspected before you rent it out. Also have your tenants sign a checklist before they move in so you have documentation of what minor things were wrong and what things the tenants caused.
* Take the time to familiarize yourself with tenant’s rights. Know your responsibility as a landlord and what rights you have as far as enforcing the rules, evictions and more.
* Be prepared that there may be times when there are no tenants in your property. Ideally when one tenant moves out, another one moves in, but there is the possibility that you have several months in between when the property is vacant and not bringing in any rent.
Protecting your real estate investment is the most important thing. With a few tips and some basic research, you can find out exactly what you need to know about leasing your property, becoming a landlord and making money in the process.