What You Need to Know Before You Decide to Buy Rental Property

Maybe you have been thinking about investing in some rental property. It can certainly be a profitable idea if it’s managed properly. Not only do your renters pay off the mortgage for you but once your debt is clear you can start banking the rent for your own future or start to invest somewhere else. It sounds like a big plus right? Well, it’s not just about the opportunity to cash in on a good investment. It’s a lot of hard work and there are a few things you need to be aware of before you invest.

There’s the Matter of Property Tax

Just like owning your own home, owning a rental property comes with paying property tax. The tax on that rental property can also go up randomly throughout the year and catch you by surprise. Depending on the state you live in you may qualify for an exemption on your primary residence but you need to be aware that the percentage on the tax cap for rental properties are higher then for your residence.

Renters Can Be Jerks

Unfortunately, it’s true and it’s something you need to prepare yourself for. Every property owner has a horror story about a renter that trashed the apartment during the time they lived there. Even if you are aware of this, you may not be fully prepared for what it’s really like.

The damage that a renter can cause to your property can cost you a fortune to repair or replace. We are talking about ruined carpets, missing items, and holes in the wall.

You would be surprised how much damage can be caused in a short amount of time. It’s good to visit your property frequently or have a security deposit in place just in case.

Appreciate When You have Great Tenants

There will never be anything that makes you appreciate a good tenant more than having to experience a terrible one. Good tenants are the ones that take immaculate care of your property just for the simple fact that they want to live in a well put together place.

So what can you do to make renters know you appreciate them? There are many small ways you can do that but not raising their rent is a great way. They will appreciate it more than you realize.

Even Basic Repairs Can Be Expensive

It’s obvious when you buy a rental property that at some point there are going to be repairs. But you may not be aware that those repairs can add up after awhile. Some repairs will only cost you a few bucks while others can set you back a bit. Replacing an air conditioner, stove or furnace will cost you a few thousand dollars for sure. Repairing things such as a sump pump or an underwater drain can cost a lot more than you would expect.

Depending on where you are with banking money from the property, repair costs may end up coming out of your pocket so you need to be prepared for that.

Rules Aren’t Always Meant to be Broken

You need to be firm when it comes to making rules for your rental property. If you don’t, you could find yourself in a situation where pets end up in a “no pet” rental or the rent itself is always about a week late. If you are too lenient when it comes to your expectations, you could end up being walked all over.

If you end up being lenient at first you will have a hard time when it comes to putting your foot down. Always stick to the terms of your lease and make sure there are consequences in place if the lease is broken. This prevents you from being taken advantage of and gives you peace of mind.

The best advice I can offer you about owning rental properties is to put some money aside from the rent that is paid just in case repairs are needed. When it comes to renting your property out, screen you tenants and make sure they follow your rules. If you can, keep an eye on your property from time to time to avoid future damages occurring. Be strict when it’s needed and ensure that your expectations are met at every turn. Leniency is rarely rewarded so be careful with that.

By following these simple rules your tenants will understand they need to respect you and the property they live in.

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