With the current state of the housing market seeing a very slow increase, and more people renting than ever, it may seem like the right time to invest in rental property. But most people would be mistaken to think that just because it seems to be the right timing, it is. In fact, when you decide to invest in real estate, you shouldn’t ask yourself “when” but “who”. Who are you? Are you capable of owning and maintaining real estate? Do you have the time? Do you have the energy? Do you have the patience?
Many believe that owning rental property is as easy as purchasing a home and soon profiting from a renter. This isn’t always true. Before you purchase your rental property, here are a few things to consider.
Is your debt under control? Putting yourself into further debt and expecting the property to bring you another form of income is not always the best answer. Depending on the market in your area, the property may be sitting with a for rent sign outside for awhile. Can you afford to keep the property and pay the mortgage while it is vacant?
If you answered yes, the next question to ask is if you are able to pay for maintenance and upkeep. If something breaks, you are responsible for fixing it. These problems can get rather costly. You may be responsible for buying new appliances should one break or fixing the roof if it caves in. Unless the renter causes the damage, it is all on your shoulders to fix.
But what if the damage is caused by the tenant and they don’t pay it? You may find yourself paying legal fees. Can you afford these? There may be legal fees for anything from going to court for eviction to hiring a lawyer to sue for property damage.
There are a range of surprise costs that come into play as a landlord so before you choose to invest in rental property, it is best to access your budget and ask yourself how much extra money you would be willing to spend.