3 Things to Consider Before Investing in a Rental Property

Investing in a Rental Property
Real estate has always been a wise investment. When you want to see your cash grow beyond anything a standard bank account can ever bring, wise investments in rental properties can prove well-worth their weight in gold. The trick is knowing how to find the right property in which to invest—and understanding what’s actually involved with being a landlord—before you find yourself falling down a money pit.

Before you go shopping for your next piece of real estate, here are three things you need to consider:

1. The Condition of the Property

You want to find a property that won’t devour your wallet when it’s time to get it up to code.

Plenty of people find fixer-uppers they can’t live without, and make a lot of profit by flipping these properties into desirable rentals. Before you endeavor in this route, you need to know what exactly is involved with putting it back into livable conditions. If you are new to the business, you need to be getting contractors out to the house once you are under agreement to make sure the roof, siding, foundation, electric, plumbing, etc.. are in good condition. You will also want estimates if anything needs to be replaced or fixed. One of the biggest mistakes novice investors make when purchasing a rental property that is a fixer upper is they do not allocate enough money for the renovations/repair costs.

  • Always get an inspection before you purchase a property. Sometimes it’s best to get two or three professional opinions if you’ll be renting your property.
  • Get estimates for the work before you make a decision.
  • Don’t bite off more than you can chew in the DIY department. Unless you’re a contractor by trade, many renovations will need to be outsourced.

2. Know How Much You Need to Bring In

Do the math before you begin your property search. How much rental income do you need to receive to fulfill your own needs? Factor in:

  • Property taxes
  • HOA fees
  • Maintenance and repair costs
  • Insurance costs
  • Capital Expenditures such as a new roof, siding, HVAC system, water heater, etc..
  • Vacancy
  • Delinquency

As you can see, the price tag can get big pretty quickly. Low-balling your rental price just to get tenants in the door can end up costing you exponentially in the end. On the other hand, if you price your property too high, great renters will simply find somewhere else to live. It’s a balancing act that requires serious consideration.

The 1% Rule is a good rule of thumb to live by. If you invest in, say, a $100,000 property, a 1% rental price would be $1,000 a month. Will that cover everything you need? If not, you might want to re-evaluate your choice of property.

3. The Right Neighborhood

Know what kind of tenants you’re trying to attract from the beginning. That will likely dictate the neighborhood in which you wish to invest. If you’re hoping to rent to families, be sure you know about the local school districts, parks, and family-friendly attractions. If you’re going for people in their 20s and 30s, condos within walking distance to shops and restaurants will be a great draw.

Purchasing the rental property is just the beginning. There are plenty of laws, requirements, and restrictions you must adhere to in order to operate a proper rental property. By hiring a premier property management firm they can help you to understand what it takes to attract high-quality tenants and avoid long term vacancy. When you’re ready, reach out to one – they’re eager to learn how they can help you manage your rental property.

Invest in Real Estate Like a Professional

Newcastle is becoming a major destination for property investment, as it is well suited for both small and large scale investors. Newcastle real estate is the buzzword for people interested in investing in properties. The city offers a vast range of properties and the demand for property is growing day by day owing to the boom in the rental market. Here many initiatives like Newcastle science central, one core strategy and urban core plan have been put into action in order to bring new business and further investment. Due to all these initiatives Newcastle and Gateshead are becoming an attractive place to live in.
best real estate newcastle
As cultural and business regeneration is going on, the population is also growing and the city is becoming the ideal for the investment. The best way to generate wealth is by making investment in property.
Professional perspective is required in property investment

If you take your property investment as a business you will make less errors. The decision can be of any type – to decide the right area to buy property and to choose appropriate tenant for you property. A professional real estate investor takes every decision very carefully and consciously and is able to get success.

Make Investment by deciding the Right area

newcastle real estate
Invest in the property according to its future market value. So you should do a little homework and ask yourself few questions – Is the area where I am investing in demand for rental properties, does this location fit in well for local real estate market. So that in future if you plan to sell your asset you will be able to make a good profit.

Choose an appropriate tenant

The selection of a right tenant is necessary as many tenants are careless and they might damage the property and leave without informing you without paying rent and the damages they have done to the property. Thus before choosing a tenant make sure the tenant is decent and will takes care of your property as if he owns it himself.

Regular maintenance and repair

The most important thing for a property investor is that he should know when the maintenance is required on the property that he or she has purchased so that ample arrangements can be made in advance to keep the property in a better shape for the long run. The issue of maintenance and repair should be resolved as soon as possible until it becomes a serious problem. By doing this you will be able to protect your property and need not face any problem at the time of selling the property.

Time to sell the property

After you have enjoyed years of the rental income it is finally time when you want to sell your property. The reason for selling the property can be any – you reach at the stage where the maintenance charge become higher to keep it or you want to reinvest on another property . So it may be good decision to sell your real estate investment. However you need to calculate the amount you have got from rental income and the money you are getting while selling the property. In case the real estate market is not looking bright at that time hold on to the property for some more time till you get a better deal.

Take professional guidance

While buying or selling property you also need to take guidance from professionals. Professionals help you in deciding property that suits your needs. In case you are looking for rental income you need to purchase property that has a friendly neighborhood or a lot of commercial activities going around well. You can even save your time and money during the process as a real estate investing professional knows the market well and can give you proper advice from where you can make profit while investing.

Author Bio: – Austin is a real estate agent and he has helped several people find their dream home in past 15 years in Australia. He loves to spend his free time with his family and one dog Johnny. Austin loves to write about real estate and works for a real estate agency in Newcastle.

The Bright Side of Investing In Rental Apartments

How to Invest In Rental Apartments
There are numerous ways to invest and multiply your money. But, a rental apartment is one of the most reliable. In spite of the fact that property values can increase and fall with the time, rental incomes remain a fixed source of income. And also, if a property is well-located, perfectly maintained and rented to reliably paying tenants, it can have a nice resale value, as well.

Whether you are planning on purchasing a single apartment to give on rent or a building full of them, you can get huge benefits. In this article, I will outline a few benefits of investing in rental apartments so as to show you the bright side of investing in the same.

A Regular Source of Income

The reason numerous investors prefer purchasing apartment buildings is because they provide a fixed source of income. When you select properly, and in a good location, rental apartments will always give cash flow consistently. Most organizations come and go particularly in office, retail and warehouse properties. However, individuals are continually searching for a place to live.

Solid Investment Returns

Even low-yielding and conservative apartments offer solid returns with respect to other resource classes. Numerous investors are attracted to the steady income, which, depending upon how you purchase your flat, can be anywhere from a couple of percent to the mid-teens every year, calculated with respect to your down payment.

But, you’re additionally paying your loan down, and this adds to the return you will get either when you sell the property or when you pay the loan amount and get a prompt increment in monthly income. While the main reduction may not appear as a noteworthy contributor of your return, remember that your home loan expands its effect, since the development is with respect to your down payment.

Operational Simplicity

As compared to other types of investments in real-estate, rental apartments are not that difficult to manage. Your responsibilities are precisely defined and your relationships with tenants are clear. This is a critical distinction from leased investments, for example, retail centers and offices where discovering occupants can be tedious and costly and the nature of each deal can be very different.

Rental Apartments Can Offer Tax Benefits

Like other types of investments in real estate, rental apartments are great when it comes to tax cuts. There are numerous tax benefits that you can claim. If you are losing cash on your property you can counterbalance this against your income and hence secure yourself a tax saving. You can likewise claim things like devaluation on fittings or fixtures which increases your tax savings.

If you utilize the returns from selling your rental apartment to purchase more investments real estate, you can likewise postpone your capital gains and recover taxes.

Main Reduction

Another advantage of apartment building purchase is a principal reduction. Your equity consequently expands every month in the apartment building. This is because your occupants are paying the mortgage on your apartment with their rents. When you get the month to month rents, you pay out costs, and afterward, pay the mortgage. With such payments, you are getting equity and also expand your wealth.

High Demand for Apartments

As trends and shifts show, a lot of individuals are hunting down the perfect apartment lifestyle. Malls, colleges, hubs of cultural activities and more are uniting individuals. They aren’t prepared to buy their own particular home and need their very own conservative space. It wouldn’t hurt you to be liberal to the possibility of addressing that request.

With a continuous flow of numerous energetic occupants to choose from, you could serve any demographic you wished to. Moreover, rental apartments are more affordable than regular houses. So your startup expenses would be considerably smaller.

Other Benefits

real estate tax benefits
The best part about giving an apartment on rent is that you can pay your home EMIs utilizing the rent gathered and yet have a flat to call your own by the day’s end! Furthermore, if you need to re-sell your apartment, there is always a bigger pool of purchasers. Beside this, condos are additionally simpler on the pocket, so little down payment is required. Bank loans are also less demanding when purchasing apartments.

Final Words

Apartments are physical resources and not only some piece of paper that claims itself to be an advantage and are considered as an astounding inflation hedge. A truth of owning land is that the investment property always gets value over the time through market appreciation. So feel free to invest with an open mind in rental apartments.

About Author:

Liza Kosh is senior editor at Mainstreet Equity Corp. Mainstreet Equity Corp. is a publicly traded (TSX: MEQ) residential real estate company in Canada. She enjoys creating, uncovering and disseminating new and interesting perspectives on real estate and home improvement.