Investing on real estate in order to rent it out seems to be a logical step for many people. It’s a great idea, technically speaking, and looks good on the drawing board, but there’s a lot more about being a landlord than just buying a property and waiting for the money to roll in.
Let’s say for example you’re planning to buy Naples real estate as an investment. You’re shopping around for Naples homes for sale for the specific purpose of finding a home you can rent out. Here are a few considerations you should keep in mind:
- Is the area a good rental destination? – Even if you find a nice house to buy and it fits your budget, if it’s not in a place where there are many people looking for a place to rent, you may find it hard to find tenants to occupy your property. It’s best to find out whether you’re investing in a good location first. You can find out this information by searching for it online. There are websites that can tell you much about specific neighborhoods and how many houses are for rent in that location. You can also do it the old fashioned way; talk to the neighbors, go to homeowner’s associations, talk to your real estate agent.
- How much is the usual rate of the rent in the area? – If you’re making an income out of the house you want to purchase, it’s possible that it would significantly lessen the burden of paying the mortgage for you. It would help if you can check out how much landlords of comparable properties in the neighborhood charge their tenants for rent. This would give you an idea on how to plan your finances eventually, when mortgage payments start.
- How do you prepare for the times when you don’t have a tenant? – In an ideal world, you’ll always have a tenant renting your property, and the tenants would always pay on time. But what happens to your mortgage payments if your tenant defaults on his/her payment or if you just can’t find somebody to rent the place out to? When thinking about buying a rental property and hoping to have part of the mortgage paid off by rental income, this is a reality that you have to be prepared for.
- Do you already know the responsibilities of a landlord? – There are a lot of these, especially on the maintenance and insurance aspect of landlordship. You should be financially prepared for unexpected expenses like when your tenant suddenly discovers something critical that needs to be fixed in the house they are renting. If you had been living there instead of them, you can probably think about putting off the repair until you had enough money for it, but you can’t expect tenants to be amenable to that sort of arrangement. As far as they are concerned, you should get it fixed because they’re paying to rent a house that works.
There are a lot of challenges to buying a property for the purpose of renting it out, but it could all be worth it considering the potential to make profit out of it, aside from the appreciation of its value.