If you’re considering buying a rental property, chances are you’ve already conducted ample research and are confident with your decision. However, there may be a few things that you simply didn’t think of or may not have given enough thought to. Before buying your rental property try asking yourself these 5 questions.
Do you Have the Time?
First and foremost, do you have enough time for a rental property? You may see many investors who seem to simply purchase a property and then sit back and reap the benefits, however this isn’t the case, there is lot of time that goes into running a successful rental, for some, a full-time job, so be sure to evaluate your time wisely prior to purchase.
Related: Why Homeowners are Choosing to Sell and Then Becoming Renters
Will Your Finance or Purchase the Home?
Many investors choose to purchase their rental properties outright as this allows for a much lower monthly overhead, however not everyone is able to do so financially. Make sure to investigate your options with financing as well as purchasing to see what fits into your budget the best.
Can You Manage the Leases?
Are you planning on writing, maintaining, and renewing the leases on your own? If not, you’ll have to budget for a property manager or legal team to help manage the leases for you, while this could help limit your responsibilities regarding your rental property, it could also cut into your profits.
Have you Budgeted for Taxes?
As with most income, rental income is also taxable income at the end of the year which means that you should always try to budget accordingly and set aside the potential taxed rate for your end of the year filing.
Have you Set an Emergency Budget?
As tempting as it may be to pocket all the profits, this is the single biggest mistake you can make. Why? Unforeseen maintenance and repairs. It is important to try and set a strict budget where you can save for taxes as well as an emergency fund before taking any profit. By doing so, should you need to replace a roof, windows, flooring, etc. you have the needed funds set aside and waiting.
Related: Flip, or Flop? Buying the Worst House on the Block
If you’re currently searching for a new home, are ready to sell your home and need a qualified and local seller’s agent to assist you, or if you have any further questions regarding New York Real Estate or the Village of Medina, please feel free to contact our office at any time.
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