Investing your money is a difficult task. Choosing where your money could thrive is a decision not to be taken lightly, and much of how you decide to invest should depend on the kind of person you are.
With housing prices dropping, now could be a good time for you to invest in property. But whereas investing in a property for yourself could earn you money in the long run, the majority of property buyers today need a regular flow of income to help keep up with mortgage repayments.
Investing in property that you can then lease could be the answer, with regular rent payments, helping buoy your finances and eventually leading to a solid income. But before you decide to invest in a buy-to-rent property, there are several questions you should ask yourself.
Are you connected?
Leasing property comes with its own unique challenges, one of which is maintenance and repairs. While many involved in renting property for a long time have built up a trusted list of contractors, first time landlords often have to rely on people they don’t know, which makes finding discounts and enhancing your profit difficult. If you go into the landlord game with several established contacts, repairs and maintenance can be cheap and easy. If you own property in the Twin Cities area, leasing your property through Simple Residential Property Management can take the hassle out of repairs. Their trusted full service maintenance department will be on hand to provide regular assistance to all your properties.
How handy are you?
If you enjoy doing repairs yourself and are capable of maintaining a property, then being a first-time landlord could be easier than relying on contractors. This will also save you money in the future, although it will take up more of your own free time.
Do you deal well with people?
Being a landlord requires you to interact regularly with all kinds of people. Having a good eye for who will be a responsible tenant and who is going to cause you acrimony will save you time and money. You have to accept that the majority of tenants will not care for a property as much as you the owner would like them to. To be a successful landlord, you have to embrace peoples different values and focus on maintaining a positive relationship with them.
Can you cover your own costs?
While there will always be unforeseen costs to a property, there are several regular costs that will drain your overall yield. Before embarking on this venture, you need to work out a budget and consider just how little you can get by on. If you paid for the property with a mortgage, remember that the rent of your property will need to be high enough to match this and cover the cost of repairs, maintenance, taxes and several other hidden costs. Remember that this is about turning a profit, so if the amount of rent required to achieve a profit is too high for the area, it’s probably not worth it.
Remember, you get out what you put in. Being a landlord isn’t for everyone, but if you’ve done your homework and know you can turn a profit, the financial rewards can be great.