By: Adrian Rand Robison
Introduction •
Investing in rental real estate can provide you with a steady stream of income that becomes almost all profit after the property is paid for. However, getting to that point is risky and requires much more work than it seems like it does. Investing in real estate will require you to choose a great property and then maintain than property, and deal with its tenants, indefinitely or until you are making enough to hire a manager.
Tips to Invest in Rental Real Estate Assess your ability to manage the property Seek a buy to let mortgage Make sure you have needed financial reserves Locate partners Start with one, small property
Assess your Ability to Manage the Property •
Being a landlord is not passive income or a part-time job. You will have many responsibilities when it comes to managing the property. This includes selecting and communicating with tenants, repairing the property when necessary, and dealing with a large variety of day-to-day issues.
Seek a Buy to Let Mortgage •
In order to rent out a property, you'll obviously have to purchase it first. This will be done with a buy to let mortgage, which is assessed differently than an owner occupied mortgage. The bank will consider the potential rental income and expenses of the property versus the owner's ability to pay for it.
Make sure you Have Needed Financial Reserves •
Owning a rental property can have unexpected problems. Your tenant can lose their job and not be able to pay the rent. You have to have enough money in the bank to get you through months without any money coming in. There are owners who are dependent on the rent to pay their mortgage. If you are in that situation then do not buy until you have a six month reserve built up.
Locate partners •
Investing with a partner or partners can provide a number of benefits. Partners can pool resources and talent between them, allowing for greater potential investment success. However, you will need to find partners that are fair and easy to work with. Ideally, you will find a partner with a skill set complementary to yours.
• Look for a local rental market that is excellent with high demand for rental homes. The tenant pool should be made up of people who have made financial mistakes in the past and cannot qualify to buy.
• Commercial properties offer larger potential returns than residential properties. However, finding and investing in them is significantly more difficult and should only be done by experienced real estate investors. To purchase commercial real estate, you will need to evaluate the property based on cost and potential returns from renters.
Who I Am‌ ďƒ˜ Adrian Rand Robison is a great husband, father, and grandfather who born and raised in the wide-open spaces of southeastern Idaho and spent 36 years in the life insurance.