4 Tips To Buying An Investment Property For The Purpose Of Renting
by Jen Thoden | Feb. 19, 2013
The idea of buying real estate to rent it for a passive income is very exciting! In fact, it's not only exciting... it's a real business model. Now, I don't want to give you the impression that you buy a property and you suddenly make millions. Not the case. However, the more you know, the more you learn, you can build this business into true wealth with passive income.
Investing money in real estate is a big decision; before you jump in unawares follow these 4 tips to buy a property for the purpose of renting it out for a profit:
1) Know the character of the neighborhood where you want to buy. Finding a beautiful property for a steal of a price will not help you find renters in a crime-ridden area. Determine where the schools are located, proximity of the property to public transportation, and the economic and political state of the region.
2) Play the waiting game. Purchasing the property at the lowest price possible gives you a larger profit margin. The next step is properly pricing the rental of your newly purchased real estate investment. Rental pricing is one of the most important considerations when you invest in rental properties. Do you price high and then have to wait until a tenant comes along who is willing to pay that much? Or do you set your rent at a lower rate where the trade-off is a lower monthly profit?
3) Know your tenants. This could very well be the most critical tip when you invest in rental properties. Tenants could either be golden nuggets of paying perfection who care for and respect your property or they could be property damagers who run up your maintenance bills and call you at all hours of the night. Credit checks are a good idea to do; reference checks are essential.
4) Be prepared with your budget. Make sure you have a cash reserve to cover months of possible vacancy between tenants, or to pay for unexpected repairs that come up. Even the little things like dripping taps can require the attention of a repairman.
Following some simple tips to buy a property before you take out your wallet can save you a lot of problems later.
One last tip... it's always a good idea to find property that has a rental history. This could mean that the house or building already has paying tenants. This removes the risk a little bit. Examine the numbers, don't be impulsive... and educate yourself before you buy.
About Jen Thoden
If you want to learn more about how to purchase real estate so that you can start making a passive income renting properties, then visit: http://www.make-money-with-rental-property.com This is an exciting business to get into, but don't do anything until you've taken the training.
About Chia-Li Chien
Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY,” Succession Strategist of Value Growth Institute, dedicated to helping private business owners increase their company equity value. She is the award-winning author of the books Show Me The Money and Work toward Reward and a faculty of the American Management Association. Her blog and newsletter was named a Top Small Business Resource by the New York Times You’re the Boss blog. Contact her at firstname.lastname@example.org or (704) 268-9378 .