We’re living in an era where we’re constantly looking for additional income. The world is becoming expensive, and your regular job isn’t enough. Even if it is, you think you deserve more to have a more relaxed lifestyle.
With the housing market in such a condition today, some people believe it’s their ticket to increasing their monthly income.
The average rent in the US is around $1,500, which is one of the main reasons why some people consider becoming landlords. However, doing this means you’ll need to consider multiple aspects, which we’ll outline today.
Choose the Location Wisely
Investing in a rental property isn’t just about getting the property anywhere. There are several aspects to consider if you want to turn this into a profitable business.
Choose an attractive location, one that will help you get tenants sooner and ensure the property isn’t vacant for long. It’s also essential to decide if you’d be using it for short-term or long-term rent.
Another important consideration about the location is to choose one with low property taxes. You are aiming to make money from this, so the less you pay on taxes, the more money you will have.
Consider Your Budget
You can want any property in the US, but it doesn’t mean you can afford it. Regardless of which location you choose, there is a wide variety of prices, so there’s definitely one that will be within your budget.
Speaking of budget, you’ll need to consider how you’ll buy the property. If you have enough saved cash, it won’t be a problem. All you need to do is make an offer. Going for a mortgage means you have some extra work.
Choosing one of the common mortgage options is problematic but often a straightforward experience. You apply for the loan, get the approval, make the offer, and hope it gets accepted. On the other hand, other types of mortgages can be better suited for you, but the approval process isn’t the easiest to go through.
If this is your first time buying a property and you’re technically unemployed, you’ll need to consider a bank statement loan. This is the one where you’ll need to show your income to let the lender know if the application should be approved or rejected.
The bank statement loan requirements are pretty simple: show a bank statement from the past 12 to 24 months of income and a few other requirements. If everything checks out, you’ll get approved.
Choosing the Property
With the general location and funding out of the way, it’s time to choose the property. This depends on your rental idea and your budget. You may want to rent a smaller apartment for tourists, so you’d pick something closer to the center of the city.
On the other hand, if you plan on renting a property for families looking to stay for a long time, then you have other things to consider. This is another location-related issue, and you’d want a property close to schools, markets, and other amenities that your potential target group would need.
The last property-related thing to consider is the condition of the home you’re buying. If it’s a new apartment or a house, then you won’t have to worry about investing too much after you buy it. Alternatively, it could be an older property renovated recently, so the same rule applies here.
Going for an older apartment or house means you’ll save some money and take out a smaller mortgage. That said, it also means you’ll need to invest in renovation. This is technically a budget-related issue, and you’ll need to do the math and balance things just right to the desired effect.
Decide Your Role in This
Being a landlord isn’t just about paying the rent each month. The property is yours, and you have to care for it, even though someone else is living there. You’ll need to consider your involvement.
Some people want to be as involved as possible, maintaining certain things, fixing others, and being there for the tenants when needed. Others rely on services that do the work for them and are willing to pay the price for that.
Set the Right Price
The last step is to decide on the price you’ll charge. It’s important to set the right price to ensure you’re earning enough but not too expensive so that no one considers your place.
Determining the price requires some research. Check out listings in the area for similar properties in terms of size and features. A slightly lower asking price could be a good idea to ensure your place gets rented as soon as possible. It should make the rental property a bit more attractive, and you should get your first tenant in no time.
