Buying a rental property is an effective way to generate income.
While My Legal Valet provides guidance and tools needed to start renting your investment property right, it is important to first understand the rental market and risks before making your first investment purchase.
Buying a rental property is a great way to generate income, but there is a lot to consider before proceeding. Evaluating the expected income, expenses, rewards and risks that come with the property can help you make the most of your investment.
When searching for a rental property, it’s key to determine whether the property you buy will even generate a decent income. One of the primary reasons people purchase rental properties after all is to draw income from that property. You don’t want to purchase an investment that is not profitable.
Start off with adequate research on rentals in the surrounding area to compare pricing. Use these numbers to figure out whether or not the rental unit itself will bring in enough income to make it worth purchasing. Once you do this, you still need to consider your expenses and find the right tenant to occupy your rental.
Annual expenses. The first thing you want to look at are fixed expenses. Examples of the most common fixed expenses are Property taxes, Water/Sewer, Electricity, Garbage, Insurance, Homeowners Association Fees and Property Management Fees.
Next, you will want to add in variable expenses. These expenses may be trickier to lay down. Your unit will not be occupied 100% of the time, it is important to be able to afford the income property even if nobody is living in it for a little while. However, the biggest variable expense would be repairs. Repairs are a tough expense to nail down, because you never really know. Some months you may spend $100 on repairs, and other months $0 or $500. Obviously there is no set number for this estimate, however, it is important to keep in mind that you will still be responsible for these upkeep charges just as you are in your own personal home.
The right tenant. Finding the right tenant can be a daunting task. But, the right tenant occupying your unit makes all the difference, especially financially. It is extremely important to properly find the right tenant to lease your rental unit to. While My Legal Valet will provide you with all the resources and tools you need to do this, who you decide to pick as your tenant is ultimately your decision.
Thoroughly examine all applicants. Do not just go off of your initial conversations with potential occupants. Don’t be afraid to reach out to previous landlords, employers and other references along with doing a credit check. You want to not only ensure that your tenant is financially responsible, but personally responsible as well.
Successful investing is about managing risk, not avoiding it.
Once you determine that your rental is worth purchasing and your able to find a wonderful tenant, your position as a landlord has just begun!
Successful Landlords start hereFrom Property Owner to Investor
Step 1Investment Property Purchased
You have purchased your first investment property and are ready to get it rented out.
Step 2Purchase the Starter Kit
Purchase the New Landlord Starter Kit for $99.99 and have your 1-hour New Landlord Consultation.
Step 3Get all Your Tools
Get access to templates, guides and forms as well as have a new Lease Agreement created to suit your rental unit and specific needs.
Step 4Find the right tenant
Use your My Legal Valet landlord tools to help you find the right tenant for your property.
Step 5Manage your property
Successfully manage your property for a low monthly cost by becoming a My Legal Valet monthly client!