Tips for buying a rental property
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Buying a property to rent out is one of the best way of investing your savings. But, like all things, you have to get it right. If you are toying with the idea, read this quick guide before making any decisions. It will help you with your thought process and steer you towards some valuable resources.
The Importance Of Area
Although buying to rent should be an excellent investment, it isn’t always the case. In some areas of the U.S., it is cheaper to rent a home than buy one. If you were to buy a home in one of these cities, for example, you will be making a loss. It may only be a short-term issue, but one you need to have in mind. Take a look at our rent vs. mortgage comparison chart for more advice on this.
The Consumption Of Time
Buying a new home is a long process, so if you are a busy person it may be too much for you to consider. But that’s just the start of it. Once you sign those papers, it will be a huge effort to get the house or apartment into a state where it is a desirable rental property
. And for every day you miss out on rent, you’ll also be spending on mortgage.A Question Of Money
Not only could you have to do the new place up – which is a hefty investment in itself – but you will be responsible for its upkeep. That could mean late-night callouts for expensive repairs or cleaning up the damage caused by irresponsible renters. If you think this will be a problem, look at approaching property management companies that can help you keep on top of things. They’ll charge you a fee, but it will be (mostly) a regular outgoing you can budget for.
The Complications Of Tax
Having a second property means you could face complicated tax returns, especially if you apply for relief. It would be a wise idea to get an accountant in, but again, it’s more outgoings and something that you need to budget for from the very start. The IRS website is a good place for tax information for home owners
.An Agreeable Tenant
When anyone has their eyes on a buy to rent property, they usually have very happy thoughts about the people that will be living there. They will be respectful to the property, on time with rent payments, and not be a nuisance to the neighbors. Unfortunately, it doesn’t always work out like that. There are some great tenants in the world, and some very, very bad ones – and you will ever know until they have their foot through the door. To combat this, make sure you get good references and, if possible, credit checks. Nothing is foolproof – and people sometimes run into unavoidable problems – but it will limit your risk.
We hope this short guide hasn’t scared you off buying a second home to rent out. But it is a realistic appraisal of what you might face. With good preparation and management, you will be fine, we promise!
Bo Kauffmann is a residential real estate agent with over 18 yrs experience in helping buyers and sellers achieve their goals. Inducted into the REMAX Hall of Fame in 2010 and receiving the REMAX Lifetime Achievement Award in 2019, Bo has sold over 500 houses and condos in the Greater Winnipeg market. He is an accredited buyer representative (A.B.R.) and a Luxury Home Marketing Specialist. Bo provides exceptional service to First-Time Home-Buyers, Seniors looking to downsize and Home Sellers of all ages. He can be reached easily By E-Mail or call/text him Call/Text Here 
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