As with any field in life, not everyone is cut out for the
type of commitment that real estate investing requires. Being a landlord over a
rental property takes hard work and a lot of time, so be prepared to work.
While being a landlord may not be your full-time job, it may feel like it is
some days. By learning as much as possible first, you will be well prepared to
invest in real estate property.
Figuring Out Finances
Just as you would when buying your own house, you will need to
seek out financing for your investment property. You may have to pay a higher
interest rate on your investment mortgage that you would on a mortgage for your
home. Many lenders believe that a borrower is more likely to just “walk away”
from a rental property than from a home that they actually live in. Some
experts say that lenders may charge up to one or two whole percentage points
more in interest for those investing in property than those who are seeking a
mortgage for a personal home.
Return on Investment
The fruits of your investment property may not come fast and
easy, as many people will have you believe. You should be making a little more
each month than what it costs to operate your property (including maintenance
and insurance payments) in order to make a profit. This means choosing a rental
property that people will be willing to pay more in rent for each month than
you need to pay for the aforementioned expenses. While you do receive a tax
break for your property’s repairs and general upkeep, many experienced
landlords do not advise that you count on this to make your profit.
Final Advice
You can avoid one of the pitfalls of the landlord lifestyle
by being aware of trouble tenants (always run credit checks and call
references). This can save you stress and financial hardship as you go on in
your investments.
If you do your research, you will be able to
find investment properties that will yield the best return for your
money. Investing in real estate can put you on the road to a comfortable
retirement or simply some extra income. By taking the proper precautions and
planning your investment wisely, it can be a profitable experience for both you
and your tenants.
