If you’re trying to get into owning rentals, it may seem a daunting task to figure out what house to buy. You want a good deal that will make you money without forcing you to constantly make repairs, and you want to be able to get enough rent to pay the mortgage and other costs on it while still making a profit.
This may sound difficult, but if you know some key things to focus on when searching for a house, it’ll make your task much simpler.
Look Beyond Cosmetics
When you walk through houses, don’t let cosmetic problems like trash and bad wallpaper turn you off from a place. They can actually be assets when you’re trying to get a good deal on a house.
Dirty carpets and ugly paint will keep prices lower and bring in fewer bidders, giving you an advantage when putting in your offer.
Once you have the house, though, these kinds of problems won’t cost much to fix, and you’ll usually end up saving far more by making the fixes yourself than purchasing a place that’s already completely ready to move in.
Avoid Big Issues
Serious problems like cracks in the foundation, bad plumbing, and shoddy roofing can cost many thousands to fix or will constantly be an issue.
Worse, if there’s a problem that might be dangerous, it can lead to a tenant suing you. It’s important to find out about any big issues before you purchase the place by having an inspector check it out and let you know their findings.
There will always be some problems, and your inspector will be able to point out the most immediate or worrisome of these for you. If the place has too many problems, you can usually back out of the sale pretty easily if it’s based on an inspector’s findings. Don’t just buy it without doing your due diligence and taking the information into account.
Check Out Foreclosures and Short Sales
Foreclosures and short sales can be great purchases as rentals, and you can often get a great deal on them. Because they can take several months to get started on the actual sale process, many investors avoid dealing with them due to a lack of patience.
If you’re not in a rush, however, waiting a while will allow your funds to build up, and you’ll be able to get a lower price. You might even be able to purchase multiple if their closing dates are spread out enough. If you time it right, distressed homes can be a great buy for you.
Compare Local Prices
Before you buy, you need to know what prices to expect. See how much similar places in the area are selling and renting for so you can be prepared to get a good deal that will rent for significantly more than your mortgage.
The rule of thumb is to get a place where half the rent covers the mortgage and the other half goes towards profit, repairs, and any time the place is vacant. If you do your research before you put in offers and you choose locations wisely, you can keep your profit secure.
It’s hard not to make mistakes when you’re delving into a new type of investment, but if you are thorough and careful when choosing a rental property, and if you’re willing to think outside the box, you should be able to find a good deal that will make you money in the long run.
7 Things To Know When Buying A Rental Property
Buying a rental property can be pretty dangerous, so I’ve tried to help people out by showing them a few things they should look out for.
If you have the money to pick up a rental property it could turn into a great investment that pays for itself. You can sit back and relax while the money comes pouring in. That is only if everything goes smoothly, but it could also turn into a complete disaster.
You wouldn’t flush your money down the toilet and that is what you’ll do if you buy the wrong house to rent out, so we’re going to look at a few things you need to think about before you make any final decisions.
A safe neighborhood
Can you imagine trying to rent a house to someone in a dangerous area? How much money do you think they’ll pay you for the pleasure of getting abused every time they walk outside? You should do some research to try and find out what the crime rate is like in any neighborhood you’re interested in. Choose somewhere that is safe and your house will be much more appealing.
Easy access to a school
If your home is close to a school it means someone with a young family won’t mind staying there. You will lose out on a lot of potential renters if they will find it impossible to take the children to school in the morning. Young professionals won’t mind renting a small studio flat, so you have to ask yourself how many people are going to be interested in your house.
When an area turns stale it will affect the housing market. Nobody will be able to get jobs, so they will leave in their hundreds and thousands to find work. It’s the complete opposite when employment is growing in the local area because everyone will be trying to get in. It leaves you in a powerful position when you have a rental house someone would snap up in a second.
Lots of amenities
There should obviously be lots of amenities in the local area because people need places to go. They need a gym so they can work out. If there isn’t a local park they won’t have anywhere to take the kids. Don’t forget about shopping malls and movie theaters so they can spend their money. If they wanted to be secluded from the world they would live on an uninhabited island.
Houses for rent
Make sure you look at how many houses are on the rental market because it will help you a lot. If there are lots of houses for rent there must be a reason. Maybe people don’t want to live in the area. It will also mean you will have a hard time renting your house out because you will be competing with a lot of other people.
Average rent in the area
You need to know how much money you will likely get paid each month. Don’t just assume you can rent the house for whatever price you like because only the market can dictate how much you’ll make. You don’t want to lose any money, but it would also be nice to walk away with some too after you pay the mortgage. That will only happen if you plan carefully, or if you’re very lucky.
An area could be about to explode and you can find out by looking into what future developments will take place. If they’re spending lots of money in a particular area you know they are trying to make the place more appealing to people. If you get in quick and pick up a house you might make a lot of money when the average rental price increases.
4 Reasons Why Renting is Better in the Long Run
Achieving the American Dream is the goal of many Americans. One of the biggest pillars of this dream is the goal of owning a home. Most people want to own a home because of the equity that they can achieve, but there are times that owning a home is not as advantageous as renting. Here are four reasons why renting might be a better financial decision.
Renting Is Cheaper
While there are many markets in which renting is more expensive than owning a home, there are areas in which the opposite is true. Those who have a tight budget should choose to rent in these areas. Over time, it is possible that the savings could lead to a good down payment that will save on interest payments.
When Planning to Stay in an Area for a Short Time
Many people have a job that will only last for a short time. Others might go to graduate school in another town or state. These stays might only be for a year or two. For those who plan to stay in a home for less than three years, the closing costs that are due when buying and selling a home might make renting a better choice. Also, it could take a few months to find a buyer, and a homeowner can wind up paying for a mortgage in one city and another mortgage or rent in another.
To Keep Expenses More Uniform
Many rentals will have a flat monthly rate that includes utilities. This setup will lead to a stable cost over the course of a year. Those who own their homes will have to take care of getting Indianapolis dumpster rentals by themselves while those who rent usually have this utility taken care of by the owner.
To Avoid Major Repairs
One of the best benefits of renting a place over owning a home is who is responsible for making repairs. Those who rent can call the landlord when a roof starts to leak. Those who own a home will have to call a roofer and pay thousands of dollars out of pocket. Renters can avoid these major expenses.
While getting a personal home is very important for most people, it is not always the best move that a person can make. There is always the problem of finding a buyer when choosing to sell. There is also the problem of paying for any major repairs that renters can avoid.
Getting Ready For Your First Apartment
Are you getting ready to rent your first apartment? I bet there are lots of things you hadn’t even considered, that you should really become familiar with before you make your move into an apartment.
- Getting approved for an apartment
- Setting up your utilities
- Getting renters insurance
- Coming up with the deposit
If you are moving into your first apartment, it’s a likely possibility you haven’t established much credit thus far, and your application could be denied for a variety of reasons. If you’re new to apartment living, you may need to consider getting a cosigner, specifically from a parent, sibling, or relative that you know well, and who knows you well.
If your cosigner is approved, then in many cases, you are approved. If you fail to pay your rent on time, your cosigner would be responsible, but this is a great way to move out for the first time into your very own apartment and is something that most first time renters should consider.
Do you know how to set up your utilities?
In most apartment communities, you’re required to pay for everything. This means water, trash, sewer, gas, electricity, cable, and internet. Most apartment communities will provide you with the relevant utility companies so you can set up your own utilities prior to moving in.
How nice would it be to move in and have no hot water? Not very, so making sure they are set up is crucial to your enjoyment of the apartment, not to mention, many communities will not even allow you to move in until they are set up.
You can usually set up the gas and electricity over the phone, and then receive your first bill after you’ve already moved in, which makes it easy. The water, trash, and sewer is more likely something that your apartment community manager will set up for you, then bill you automatically each time he/she bills you for your monthly rent.
If you haven’t ever lived in an apartment before, you are probably not aware of all the things that going on in a rental community.
Cars could be broken into, apartments could be burglarized, or personal belongings could be destroyed during a natural disaster. A renters insurance policy will insure you and your personal belongings while living in an apartment.
The great news is that if you are a first-time renter and have little funds for additional costs, renters insurance policies will likely only cost you about $10-$15 to cover what you require, and in many cases is even cheaper than that.
Also, if you pay for your own car insurance, you can bundle your renter’s insurance policy with that auto policy, and save money on your auto policy for having the bundled policy.
Once you are approved and have your move-in date set, you need to pay a deposit. A lot of communities offer a discounted deposit on approved credit if you move into their community, but you need to be careful. If you get a deal such as $99 deposit to move in, set aside a few hundred dollars to protect you from under-budgeting your move out costs.
Move out costs are deducted directly from your initial deposit, but if your deposit was a move in special and doesn’t cover your move out the total, then you likely would owe the community money, which is never fun.
Plan on having about one month rent on average set aside for a deposit, because most communities don’t run deposit specials and charge you the first and last month to move in.
How To Increase Value Of A Property You Want To Rent Out
If you have a property – residential or commercial – that you are looking at renting out, then you obviously wish to get the best rates for the same. Although most of the times the rates are dependent on how hot the market is, there are still some sure-shot ways to attract great prices at all times.
Here’s how you can increase the value of the property you wish to rent out:
Make It Attractive
Paint up the whole space in great colors. Give it a fresh feel, with neat walls, such that there are no cobwebs in the space, or dampness affecting the walls.
Space should give the feeling of being ‘new’, even if it has been used. Looking at a beautiful space, people psychologically get convinced to pay more, because they feel it’s worth it.
Make space seem airy by cleaning the windows and putting nice window frames. Also, change the doors and other little functional things here and there to make space seem appealing.
Make sure that you get an extensive pest and termite control is done in the space so that the potential tenants know that it is hygienic to live in.
They will also realize that since the job has been done by you already, they wouldn’t have to spend their own money on maintaining the termite, which could be motivation for them to pay slightly higher rents. Convince them on how the property is sanitized and healthy to live in.
Furnished places always pay better than unfurnished places. So if you can manage to spare some extra money and get the place furnished, your property’s value will increase.
Moreover, for you, these furniture pieces are an investment, just like your property. Even after the tenants move out, you will still have the furniture to yourself, which you can easily offer to the next set of tenants.
When you give facilities in the form of appliances, such as geysers, air conditioners, coffee machines or other kinds of domestic devices, it makes the potential tenants feel that space is giving them a lot of facilities for a comfortable stay.
Again, like furniture, these become your investments, which stay with you even after the tenants leave. And these surely give a boost to the value of the property a lot.
One of the key points to note is that if you want your property’s value to keep escalating from time to time, you need to maintain it well.
Whether it’s a big bungalow, which requires you to maintain the lawns and the swimming pools, or whether it’s a small office space, which requires you to keep servicing the air conditioning systems each year, maintenance pays a lot in the long run.
The more you maintain the property like your own home or office, the more attractive it will seem. Keep a track of the market status to know what is the best time to put it on rent, so that you can gain maximum benefit out of it.
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