A Guide to Investing in Rental Properties

Buying houses for the purpose of renting them out as an investment is not as easy as it sounds but neither is it that complicated procedure that it can be made into; it depends on how much you know about real estate, how willing you are to learn, and how efficient it is you are in and managing your home, as an example. Don’t go into rental properties as an investment if you find piddling around your own house, making improvements here and there, boring and exhaustive.

You begin by searching for that first property.  This should be thorough and is something you should do on your own. This is a priority because this will also be your first lesson in how to invest in rental properties. If you find this tedious and unrewarding and you are anxious to get on with the business of earning money, perhaps you should stop, examine your reasons for this move, and if making money is your only objective, look for other investments; investing in rental properties will not be for you.

Your searching should not be relegated to a real estate agent because they’ll be insistent and will annoy you with all kinds of reasons why you should buy this or that property. Maybe after you’ve learned the trade and are ready for this kind of help, you can have them assist you in finding the right kind of property, but until then, go it alone.

Starting your search

You begin by searching out your own neighborhood and adjacent neighborhoods to see what is available. You don’t want to get too far removed from your own area when first beginning to learn about rental properties. This is an especially good idea if you plan on doing some of the minor repairs yourself; you’ll want to be available whenever something goes wrong, or most importantly, be there when it’s time to collect rent.

Once you’ve found at first house that appeals to you and it is affordable, check out how much it will cost you to maintain and deduct this from the money you’ll earn. Property taxes will be your first item on the list once you’ve almost settled the agreement to buy. You need to know how to deal with income from this investment and what can be claimed as deductions.

Once this hurdle is settled and understood, you’ll want to know the positive aspects to this rental property. Questions you ask yourself are who will be renting this, how long will they be staying, and what kind of neighborhood is this. Is this a crime-ridden area or is it basically residential with relatively little street crime.

You certainly don’t want to buy into a crime-ridden area for your first rental project. That will only compound the problems and the uncertainties you’ll find in will dishearten you from ever even considering another rental property. It would also be helpful if you make sure that everything is in good working order so you’ll have no extra expense in getting it ready for rent.

Locating this property near an excellent school system will be a plus. When families are looking to rent, an excellent school may make all the difference in keeping your house rented. Of course too many children in a family may mean destruction of your property and you will need to take that into consideration. A thorough check of every nook and cranny of the property and a documented list of needed improvements, and a signed statement by the renters as to the condition of the property when they first moved in, may be in order. Picky landlords will be nothing new to renters and they’ll expect you to look after your property.

With careful foresight and understanding of what’s real and what’s not real in rental property, and with this first purchase, you’re well armed with facts and figures and know how. A new venture for you will have begun. After successfully maneuvering through this first hurdle, you’ll be looking for the second property. With the right mindset and a love for people and an understanding of their needs—and their contrariness—you’ll be on your way to becoming a successful landlord.