Things You’ll Need to Consider When Scouting Out a Potential Rental Property

Investing in a rental property without doing your homework can lead to tremendous financial losses and the world’s worst case of buyer’s remorse. So, the next time you come across a property that strikes you as a good investment, it’s in your best interest to avoid acting rashly. After all, what seems like a solid investment one moment is liable to seem like an enormous waste of money in the next. To help diminish your chances of regret, take care to consider the following factors before investing in your next rental property.

  

What Type of Funding Do You Wish to Use? 

It should come as no surprise that rental properties represent expensive investments. While some properties are pricier than others, it’s safe to say that even a low-level rental is going to cost you quite a bit. So, when scouting out potential investments, make sure to give some serious thought to the type of funding you wish to use.

Do you want to be the sole owner of this property? Although this may be conducive to generating the largest individual profit, it also comes with the most risks. Conversely, investors who don’t want to take this large a gamble may want to consider real estate crowdfunding, which involves investing in properties with other individuals and splitting the profits. Anyone looking to learn more about the most important real estate crowdfunding factors to consider should get in touch with a good real estate investment company.  

What Level of Maintenance Will the Property Require? 

Maintenance should factor heavily into your thinking when considering a property investment, because while you may be able to afford the asking price, you may not be financially capable of maintaining the property. When it comes to small single-family properties, landlords can often offset maintenance costs by personally attending to most of the duties regarding maintenance and upkeep. However, when dealing with apartment and condo complexes that contain large numbers of units, maintenance costs can take up a significant portion of the rental income the property generates each month.

So, if you’re looking to invest in a large multi-family property, be advised that it may be necessary to hire full-time maintenance personnel. The more units a property contains, the greater the need for onsite maintenance, and attempting to manage a large rental property in the absence of regular maintenance staff is liable to prove immensely stressful for both you and your renters. 

This is why it’s important to carefully consider monthly maintenance expenses before proceeding to purchase a property. After weighing the amount of rental income you expect a property to bring in each month against the monthly cost of maintaining that property, you may ultimately deem the investment to be unwise.    

How Involved Do You Want to Be in Managing the Property? 

Depending on the size of the property you’re looking at, you may be able to turn managing it into your full-time occupation. After all, if you’re dealing with a property that encompasses dozens – if not hundreds – of units, taking a hands-off approach to property management may not be feasible. Needless to say, if you own multiple properties or have a completely separate day job, you’re likely to be very limited in your ability to act as an effective, efficient overseer. 

In such instances, landlords can benefit from working with dedicated property managers and/or property management companies. As the title suggests, a property manager will be responsible for every aspect of day-to-day rental property management. These duties include assigning tasks to maintenance personnel, processing rental payments and addressing tenant concerns. Of course, you’ll still have final say over every decision, but ideally, your property manager will be someone you trust to act as a dutiful proxy and make informed choices on your behalf. 

No matter how eager you are to get the ball rolling on your first real estate investment, it’s important that you take the time to make an informed decision. While the desire to strike while the iron is hot is perfectly understandable, making such an enormous purchase in haste can have far-reaching consequences. Conversely, doing your homework before signing any paperwork can prevent you from making a tremendous mistake. So, the next time you find yourself in the market for new rental properties, remember to consider the factors discussed above.  

 

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