Insights for Buying a Rental Property

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Compared to other investments, real estate makes for one of the best. If you want to buy a rental property, not only must you understand the basics of commercial real estate law, but you must also know what to look for in your first rental property. Here are tips to help you find the right property for your investment goals.

Sort Out Personal Debt

Before you look for rental properties, look at your current financial obligations. Any personal debts you have could impede on your financial resources as a landlord. Essentially, you do not want to risk your personal debts going unpaid because you funneled that money into your rental property and tenants. The ideal financial scenario is one where your monthly rental property income exceeds your monthly debt payments.

Decide If You Are Landlord Material

You must have a well-rounded idea of what it takes to be a great landlord. For instance, are you good at using tools and handling basic repairs? Are you OK with dropping everything for a tenant emergency? Do you think you can handle unruly residents and evictions? Of course, you can hire a property management company and professionals to handle maintenance and upkeep, but such services cost money, which chips away at your residential property income.

Save Up a Sufficient Down Payment

Just like when you buy a home, you need a down payment for an investment property. That said, expect to need a larger down payment on an investment property than you would on a home that you live in yourself. Also, approval requirements for investment properties are often stricter than those for owner-occupied residences. Bear in mind that you cannot get mortgage insurance for a rental property, so plan on saving up at least 20% for an investment property down payment.

Take your time when finding the right residential property and deciding if you have what it takes to own and manage it. Acting prematurely can cost you in more ways than one.

The author is an expert on occupational training and a prolific writer who writes extensively on Business, technology, and education. He can be contacted for professional advice in matters related with occupation and training on his blog Communal Business and Your Business Magazine.