Buying a Starter Home

Is Investing In Real Estate Rentals A Good Idea?

29 March 2017

Capucine Leroux

Investing in real estate properties to rent is not an uncommon strategy, and if you have the money to spend, you might wonder whether this is the right choice for you. There is no catch-all answer to this question, but there are several more questions that you can answer to get a better sense of whether this opportunity is right for you.

Do You Want to Be a Landlord?

A decision to buy rental properties is also a decision to become a landlord. There are responsibilities that come along with this type of investment. It requires a time and energy investment as well as a financial investment. Of course, you can contract out many landlord tasks to a property management company, and that is an expense to factor in when you are deciding which property to buy.

Have You Factored In the Costs of Maintenance?

It's a tricky calculation to determine whether your investment will land you in the green. Aside from mortgage payments, there are many other monthly costs for incidentals, maintenance requests, property managers, and property taxes. Your real estate agent or accountant should help you calculate how much rent you need to charge to make this a successful investment.

Are You Looking for High Return?

Another thing to note is that real estate for rental purpose is not a high return on your investment. It is more for someone who is looking to have a steady supplement to their income for a longer span of time. If you are interested in amplifying your money quickly, you might be more interested in house flipping.

Do You Have the Skills to Make a Savvy Purchase?

Finally, not all real estate deals have the same return, and that is partially due to the original decision on which homes for sale to buy. Your rental property should be in an area that is a great rental market (as opposed to a buying market). You might even consider beach homes for sale that make excellent monthly rentals and vacation rentals, which is a way to diversify your potentially income sources. The costs associated with the home should below compared to the amount of rent you can get for the property. It should be in an area that is projected to have a great economy in the years to come. You might decide to leave most of these decisions to a real estate broker in your area who can present you with the most attractive homes to buy when your intention is to collect rental income.

Share

Search