Based on your investment property, try to imagine who you will be renting the property to. If you are in a college town, you have to consider how far students are willing to be from campus to be closer to locations they find ideal. If you are in the suburbs, how far will a family want to travel between a good school, daycare, or the park? Or if you are in the city, is the tenants by reliable public transportation and desirable attractions? Looking for investment properties near major roads, public transportation, and good school districts is an ideal start.
Start with an affordable initial investment like a single unit or a duplex compared to an entire apartment building. Initially, avoid properties needing extensive repairs, as these could cause you to overextend yourself.
Treat each rental property as its own business to improve your investment. A large consideration to take in is to accurately estimate rental income and the costs associated with leasing a property. If the landlord does not keep these issues in consideration, they could potentially own a property that is a net loss every month, rather than an investment. Rental purchases should have a good rate of return and positive cash flow. Monthly expenses could include the mortgage, taxes, insurance, lawn and home maintenance.
Due to regular maintenance and repairs during turnover, you should not spend too much on rental property upgrades. Take into consideration of what type of maintenance is required based on the type of property you purchase. For single family homes, the landlord is generally responsible for snow removal, leaf removal, and lawn maintenance in comparison to a condo or townhouse where the maintenance is included into condo fees.
When choosing applicable tenants, a landlord should take into consideration a few factors: is the person applying qualified, do they have a history of late payments, or a record of lease violations? A suitable tenant’s income should be at least three times the rent and verified by their employer signing a form or proof with two pay stubs.
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