Buy To Rent
If you have money to invest and are looking for a steady source of income while retaining the value of your investment, consider buying a property that you can rent out.
With the downturn in the market, it is a good time to acquire a cheap property that you can rent out to tenants. The right property will give you an income for years, often well over the return you can expect from many other investments. It will also hopefully give you a good profit when you sell after the housing market upturns again.
Choosing The Property
The mantra of real estate agents 'location, location, location' is even more true when you are buying to rent. A fixer-upper in a good neighborhood is better than a beautiful house in a rundown street, unless that street is in an up-and-coming area of town. The property also must be the type that will appeal to renters. A multiple occupancy property will appeal to students or singles, a condo or duplex will interest families, while a bungalow in a gated community will suit seniors.
Who Are Your Renters?
· If you have a daughter going to college why not buy a property in her college town? She can live there free of charge with her friends, while they pay you rent. This will not only save you money on dorm fees, but will give you an income too!
· If you are not far off retirement, think about buying a place in a retirement community and renting it out to other retirees in the meantime
· Buying a duplex where you live in half the property and your tenants live in the other half is especially useful if you travel a lot . Having tenants helps to safeguard your property while you are away, and their rent can cover most, if not all of your mortgage
· Vacation properties are another option. You can buy a vacation apartment, cottage or house and rent it out most of the year. By using it yourself just in the off-season, you will have an investment, an income and a vacation home all in one!
· If you have a large sum of money to invest, buying an apartment building with existing tenants will give you guaranteed income. However, you need to make sure that the property isn't subject to rent control , otherwise you may not be able to increase the rent even if you make improvements
Managing The Property
Before you make an offer on a property you have to consider how you are going to manage it. After all, it's all very well having tenants but you want to make sure that they pay the rent promptly and keep the property in good order.
· Managing it yourself will save you money, but if you live far away it will be difficult to make sure that your property is maintained properly. You may also have problems collecting the rent
· A managing agent can get you good tenants, collect your rent, deal with any problems and make sure that repairs are carried out promptly. The downside is that they eat into your profit as they can take between 10 -15 % of the rental fee
· With an apartment building, having an onsite superintendant manager can be a very good idea, even if you give them a low-rent or rent free apartment in the building. They will deal with tenant problems on your behalf and see that the apartments are maintained properly
