REAL ESTATE SPOTLIGHT: Top Tips On How To Buy and Rent Out Property

By  //  August 22, 2017

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Make sure you can cover the down payment

Many people manage to make a small fortune for themselves, or even more, by purchasing property and renting it to other people.

Many people manage to make a small fortune for themselves, or even more, by purchasing property and renting it to other people.

This isn’t something new, but someone new that might want to get into this type of business could struggle with understanding how to properly go about it.

We’re here to help! We are going to go over the most important things to consider when you go through the process of securing a renting opportunity for yourself.

The first step is to make sure you can handle it

The young entrepreneur in you might say that this is absolutely the right move for you. However, reality might beg to differ. Just because it’s a terrific opportunity it doesn’t mean that it’s for everyone.

There are certain implications that come with renting property, so before you spend your nights away on looking for property, make sure that you’re actually ok with what this commitment would mean.

Landlords have to constantly make repairs around the property, not to mention keep the tenants in check. If you don’t like always checking on people or you don’t know how to repair things in a house and can’t afford a repairman either, it might not be for you.

Handle your debts first

So many people make the mistake of starting such a business with debt from previous affairs. While it can be very profitable, you won’t “strike oil” on the spot. It takes time and debts can really mess with your profits.

In other words, debt can take your profits and stop them from being profits anymore. Your finances and morale will crumble together and all because you didn’t pay off what you owed in other places before starting to rent property.

Make sure you can cover the down payment

The down payment for investment property is substantially bigger than the one for buying property. While you might be hoping for a down payment below 5%, you will have to tackle something along the lines of 20%.

Even if you can afford it, paying that much and leaving yourself uncovered can lead to an untimely demise of your newly born operation. Make sure that you have plenty of capital to cover the down payment and continue to carry on business afterwards.

Even if that means delaying the project, you should consider it because it means you will have a more sturdy opportunity and you won’t risk cutting the branch from under you.

Refrain from fixer-uppers

One of the biggest lies that new landlords tell themselves is that they can take a beat down property and restore it to glory before renting it.

That’s not going to happen, or at least not the way you picture it. It will be very expensive and even messy. It will cost you a lot and it will exhaust you in the process as well.

All that is not worth the trouble and it is considered a red flag when it comes to investment property decisions.