So you are interesting in becoming a landlord? Investing in rental properties can be an exciting and very profitable business. Not only can real estate provide current income through rental property but it also can increase your personal wealth or networth. Make no mistake, this is not a sure thing to easy money and investing in real estate is not for everyone. There are risks as with any business or investment but with careful research and the help of a real estate professional you can find the right property in the right location for maximum return on your investment.
Steps to purchasing your rental property
- Meet with a mortgage broker to determine how much you can borrow and to obtain approval for a loan.
- Next you need to determine the type of property you are looking for. Will it be a single family home or commerical property with multiple units?
- When you have a potential property identified estimate the possible rental income you could expect from this property based on comparable rentals in the area.
- Determine your anticipated cash flow from the rental. You will need to consider income from rent compared against all expenses including the mortgage, insurance, property taxes, maintenance, and repairs.
- Be sure to review the potential tax consequences of your purchase.
- Rent the property until you determine it is in your best interest to sell it.
Because of the potential financial and tax consequences of your decisions, it is very important to consult with a professional real estate agent throughout this process. You will also likely need the assistance of an attorney and a tax advisor.