Investing in rental properties has proven over the years to be a fantastic way to make money. Not only does owning rentals increase your equity and thereby your ability to acquire additional properties but it also provides a nice monthly income. So what is the best way to go about securing the right property and finding the right tenants? There are a few agreed upon steps that one can observe, the rest is up to you.
The first step of proper investing is the same as any other home purchase: ensuring that your finances are in order and your debt load is minimal. If you have a high debt load then this may not be the right time to start investing. High debt = less mortgage options, and finding the right mortgage for an investment property is going to be critical. You will want to try to find a mortgage that has a reasonable monthly rate that will still allow you to see a monthly profit and have funds left over if there are any repairs that need to be done. After all if you are not seeing a profit on a monthly basis then something is amiss.
Be careful in selecting the location for your rental. Be sure to spend some time investigating the areas first. Many areas and complexes have strict rules regarding rentals, this is especially true in condos. Some places do not allow vacation rentals at all, so be sure to do your homework The kind of location you choose will vary depending on your target market. Here in Florida, the vacation rentals market is thriving like never before and this type of rental accounts for a huge percentage of the market. That being said, there is a definite security to long-term renters. Vacation renters are going to be looking for access to major attractions, things such as theme parks, beaches, restaurants and shopping. On the other hand; long-term renters will be more interested in things like proximity to major business centers, schools, sporting activities and quality of the neighborhood.
One thing to make sure of is no matter which type of rental property you choose, that you have written agreements with the tenants. This is especially important in long-term rentals as a tenancy agreement can go a long way to the protection of your investment. It also protects your rights as a landlord, and the tenants rights as a renter. It simply makes things easier and safer all around.
By: Ed Kirkland