Buying A House To Rent Out? 4 Things To Consider First

On TV, there has been an unending emphasis placed on investing in real estate. Countless advertisements are advocating for people to buy lands and houses to rent, to increase their return on investment.

However, just like any other businesses, there are risks involved that one should keep in mind before investing. In order to get the best out of a newly purchased home that is being considered for rentals, there are things that should be improved or updated.

This is done in order to come up with the best way to increase your returns, and ensure the safety of your building as an investment. Today, on Rebecca’s Realtor, we will be discussing four things you must know before buying a house to rent.

1. How Much Income Will Be Generated

It is imperative that you consider the expected returns from the rent that will be paid by future tenants. The rent to be paid is dependent on the rates that are being charged within a specific locality. In that case, before buying a house, you should know the rent that landlords are charging, per month, for the area the potential house is in.

2. Annual Expenses

There will be expenses incurred while owning a property, of course. There are those that are fixed, and those that vary, based on circumstances.

The fixed ones include property taxes. These taxes vary from one place to another, and some of these taxes might be high for an investment. As such, you need to get together with a tax assessor to evaluate the taxes for the area that the house you want to buy is located in. Cost of management services, insurance, routine repair, and maintenance costs are some of the expenses that you should take into consideration.

On the other hand, the variable expenses are the ones that occur circumstantially, ones that are hard to set at a fixed figure. For instance, there might arise the need to replace the roof, fence, floor, the plumbing system, or the air conditioners. As such, you are required to note that some funds are to be set aside to meet these expenses.

3. Risks Associated With Rental Properties

Just like any other business, there’s always risks involved. For instance, when you buy a house that you will be renting out, there are times when the property might sit empty in between renters.

As such, the overall return goes down. At times, some tenants might not be cooperative regarding payments, or meeting the behavioral policies set for your house. They might have to be evicted, and it has to be done legally.

Legal eviction requires some funds, increasing the expenditure on your house investment. Renting the home to bad tenants can result in damages, and you might find yourself digging into your wallet for repairs. When you are not in favor of managing the house, you will require the services of a management firm. As such, you will have to incur extra management costs.

4. The Neighborhood

The tenants who will rent your house will be attracted, or discouraged by the type of neighborhood surrounding it. Security is a major factor, since the crime rate in the area will influence future tenant’s interest in renting your house.

Therefore, to ensure that you keep tenants in your house, buy one that is in a secure neighborhood. Additionally, when it comes to parents, there are children to consider. Because of this, you may need to buy a house that is close to schools. At the same time, your house should be connected to good roads for accessibility to those schools.

Final Thoughts

Before buying a house to rent out, you need to have the knowledge associated with such an investment. Know the amount that the potential house is likely to earn, the expenses on the property, the risks involved, and the neighborhood around your house.

When you buy a house that has the potential of a high income, with minimal costs and risks, and is located in a safe area, it is a guarantee that you will see a good return on your investment.

The post Buying A House To Rent Out? 4 Things To Consider First appeared first on Rebecca Silva.