The topic of investment in real estate can be very controversial. For a long time, it was thought that real estate was a secure and one of the safest investments that one could make. The economic downturn and the scandal of the financial and mortgage industries showed us that our assumptions may be wrong.
There are investors who swear by real estate while others would not recommend it at all. One factor is clear: to make it successfully, one must have the financial means to sustain potential losses.
I am not an expert in this domain, but I have observed a few facts. To venture into real estate investing, there are a few qualifiers or to absolutely have or conditions that must be met. If you are thinking of this way of generating a passive income, read on.
Consider the Type of Property
First of all, it is important to carefully think about the type of property you will invest in. Apartments are often easier to rent out than houses, although the latter can usually be rented out for a higher price. You should also carefully consider the neighborhood you want to buy in as well. More expensive areas and neighborhoods will cost you quite a bit more to buy in, but as a return you might be able to set the monthly rent above the market average. In addition, these areas often attract a better quality of renters. The goal is to make a monthly profit that covers your expenses. You should also put a high priority on investing in areas where the turnover is quick. Areas like the Washington DC metro area could be great investment opportunities.
Consider Using A Property Management Company
If you are a super busy individual and don’t have much time to look for tenants, it is still possible to become a landlord. Managing properties is not a simple task or an easy one. So, there is an alternative way around it – a residential property management might be the solution. Such a firm will take care of the administration. They can find you some tenants and will also handle collecting the rent. In fact, some of these firms will do everything for you – a few even take over all building repairs and maintenance! Granted, this service will come at an additional cost, but it could give you peace of mind.
Keep on Top of Your Taxes
Even if you have another full-time job and are paying tax as you earn, you still need to take any income that you receive from your rented property into consideration. This will be increasing your annual earnings, so you might need to pay more taxes. If in doubt, it’s always advisable to speak to an accountant who knows a thing or two about investment properties.
Be Quick with Repairs
Your tenants will have various rights to ensure that the property they live in is suitable as a dwelling. If something were to ever go wrong, it will be your responsibility to see to all the required maintenance and repairs. You shouldn’t wait too long to take care of anything like this, as it could give your tenants a reason to take you to court. So, make sure you don’t delay with property repairs!
You are now equipped with some basic information related to investing in real estate properties. As I mentioned earlier, this is not an area of expertise for me, but I know many of you are considering it. Now it’s time to do your own research and ensure that it is the right move for you. You may enjoy being a landlord.