Guide to Buying Your First Rental Property

renting a house

Investing your money is the best thing you can do with it. A sure bet for a good investment is owning a property and renting it out. This has the advantage of providing you with a constant stream of income. The challenge for those who want to put their money into real estate is what to buy to maximize profits.

Here are some tips that should point you in the right direction:

Don’t Think It Will Be Easy

Being a landlord may sound simple to others, but there are many responsibilities attached to the job. For one, you need to ensure that your tenants are happy with the property. That means keeping the utilities in good shape and doing immediate repairs. Besides that, you will need to be sharp when it comes to collecting rent. Make sure your tenants are not taking advantage of you by checking on them regularly.

Start Off With New Houses

One of the best purchases for new landlords is a new house and lot package. These are built by developers in planned communities and are perfect for families. The newly-built homes in Draper and other nearby areas are perfect examples. The reason for investing in them is because they are brand new and ready for occupancy. There is no need for repairs or changes. Buy one and look for a tenant immediately so that you can start collecting rent within a month. Since it is new, you won’t be spending much beyond the initial purchase price for the next few years.

Think About Using Leverage

renting an apartment

Many potential landlords hesitate because they don’t have the funds to buy a property. This should not be an obstacle if you have good credit. Do not hesitate to take out a loan to buy a rental property. Remember that you will be renting this property out. You can use a chunk of the rent as payment for the loan. That means you can start profiting from your property before it is even fully paid for. Ensure that you fully pay off the debt so that every rent you collect from then on is pure profit.

Be Choosy About Tenants

Your tenants will be your moneymakers, which is why you need to screen them thoroughly. There have been many stories about bad tenants who have been late on their rent or damage the property. It is always a good idea to do a background check on your potential renter while also asking for a security deposit. Being strict on rent is also important. Consistent late payments are a bad sign and you should look into replacing the tenant as soon as possible.

Renting out your property is one of the best passive income generators you can have. With some investment in time and money, you can be earning a profit for decades to come. Keep these tips in mind when looking for potential rental properties. With smart purchases and decisions, your sources of passive income will be ready in no time.

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