New to Renting Properties? Consider These Five Points
Experienced investors who buy to rent homes have seen it all. Market swings, rent fluctuation and neighborhood renewal are all part of the journey. If you are new to the rental market industry and thinking about becoming a landlord, consider these 5 points:
- Determine all of your property expenses – Calculate your actual monthly expenses or carrying costs for the property: any mortgage payment, real estate taxes, insurance, homeowners association or other common charges such as monthly homeowners association fees.
- Evaluate current market conditions for establishing the rent amount – Research the demand for rental properties like yours in the neighborhood. Through a comparative market analysis, determine the value of existing properties in the neighborhood and the price similar properties rented for within the last six months. Almost all of this information is available online, but you may also want to speak with a local real estate professional.
- Analyze your cash flow – Determine how much monthly rent you can secure for the property and for how long. Compare this to your property expenses to determine your profit margin. In addition, create a maintenance or emergency fund for the property for when “things happen”.
- Consider the longer-term outlook for the neighborhood – It’s not always easy to determine which way the property values are moving in a neighborhood. You can find comparables from the last three to four years to detect a trend. If the neighborhood’s property values are on the rise, you might have more leverage when asking for a long-term lease.
- Get the properties ready to rent – Determine how much it will cost you to get your properties ready for the rental market. The basics are painting and cleaning, but you may want to consider some kitchen or bath updating as well.
Building a portfolio of rental homes can be a smart move toward consistent income and financial independence. Be prepared for the opportunities and challenges that go along with being a landlord. Visit us at www.b2rfinance.com and follow us on Twitter @B2RFinance.
The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.