Becoming a landlord can be a financially lucrative prospect, but it’s important to navigate this new venture carefully. Here are some things to consider so that you can make the most income from your rental property.
Make Sure Your Property is the Right Price
A common mistake many eager new landlords make is to buy the first rental property they can afford. An impulsive purchase can lead to many financial problems down the road. It’s important to consider both the market value and the potential rental income of the home before you purchase. So how do you know it’s the right price? Having equity on day one and having a positive cash flow is the goal. A good real estate agent will be able to guide you on values and rents.
Know Your Expenses
There are a lot of expenses to consider when finding a rental property that will make you the most money. Here are some common expenses to factor in to determine your final profit every month:
- Taxes
- Insurance
- Utilities
- Maintenance
- Management
- Home Association Fees
Do Inspections
Inspections during a tenancy are essential to be sure your property is being maintained and cared for. Even an inspection once a year could save you major repair costs later down the road. Be sure to give your tenants plenty of notice before an inspection and let them pick the day and time.
A rental property is a great way to make income with little effort, but it’s important to know what you’re getting into and do your research. Be sure to ask your real estate attorney any questions you may have about the process.
Consult with your accountant
There are many tax advantages to owning rental properties. An accountant is key team member as you go forth and build your real estate portfolio.