In our previous article
we discussed the different types of rental property you may consider purchasing, and the first important steps in the process.
So now that you have identified a property, you will want to have it inspected by a professional. You will want to know the condition of the roof, the foundation and all of the mechanicals of the property. This inspection will also help you know what kind of future expenses you may incur. Will you need to upgrade items for the benefit of your tenants and to make the property more desirable? Will those items need to be done immediately or at some time in the future? You will not be in the property day to day to take note of any issues as they arise, and yet you are the owner and will have a vested interest in the upkeep of the property. You should have a budget for repairs and maintenance, and you will want to insure that your purchase price enables you make any necessary upgrades prior to renting the property.
You will also want to be aware of the locale of the property, including parking and security issues. Be sure you are aware of zoning regulations and Homeowners Association rules about rental properties, multiple occupancy limitations and any restrictions on specific business activities. Understanding all of the governing regulations will make you a better landlord and investor.
Remember You’re In Business
Legal documents, including your rental agreement between you and the renters, and service agreements between you and concerned parties are essential. You will also want to be aware of the additional – water, sewer, trash, utilities, homeowner association fees – who is responsible for those? You or the renter? Insurance is another important factor to consider, first off will be insurance for the structure itself but also consider liability insurance in case someone is hurt while on the premises. Do you need earthquake or flood insurance? Since you are responsible for the mortgage you will want to be sure you have all the right kind of coverage. And will you require that your renter has renter’s insurance? Be sure you are clear about these fees up front, it will save headaches later. A real estate lawyer will be an invaluable asset to you!
Buying a rental property is much like running a business; you will be collecting rents and incurring expenses for repairs and services. When profits are being realized and money is changing hands you may also want to have an accountant, one who is versed in real estate investments and the tax implications. Tax issues become more complex and a professional will aid you in maximizing your return on your purchase.
Success in business is not accomplished alone, and investing in real estate property is no different. Developing a team of professionals will make your experience smoother. We, as your real estate agents, will be there to help you with each step for a successful investment purchase – and when the time is right to sell, we will still be there for you!
Helping you with all of your real estate needs is our goal,
Getting you through the process is our expertise.