Decide if you wish to be the landlord
Being a landlord could be a good way to earn real estate income but it is not easy or glamorous. Adding to choosing the right property, finding reliable tenants and preparing the unit could be your responsibilities. Other than this, there are maintenance hassles and headaches. If you are looking for property investment advisors Melbourne, you could easily opt for buying an investment property by finding an organisation online.
You could call somebody to do repairs for you or could hire a property manager who would take care of your property for a monthly sum. Property owners who have more than one home would often carry out their repairs to save money. If you are not the handy type and do not have much cash to spare, being a landlord might not be the right thing for you.
Finding the right location
The last thing you want is to be stuck with a rental property in an area that could be declining rather than stable or picking up steam. A city-bound locale where the population grows and its revitalisation plan underway represents the potential investment opportunity.
When you plan to choose a profitable rental property, you should look for a location with low property taxes, a decent school district and plenty of amenities like restaurants, shopping malls, coffee shops and parks. A neighbourhood with a low crime rate, easy access to public transportation and growth in the job market would mean a large pool of potential renters.
Be cautious about high-interest rates
The cost of borrowing money might be relatively cheap but the interest rate on an investment property could be higher than it is for a traditional mortgage. If you decide to finance your purchase, you would need a low mortgage payment that does not eat into the monthly profits too much.
Invest in landlord insurance
Protect the new investment. In addition to homeowners’ insurance, rental property owners should always purchase landlord insurance. This type of insurance generally covers lost rental income, property damage and liability protection when a visitor or a tenant suffers an injury as a result of property maintenance issues. You should keep in mind that standard homeowners’ insurance policies might not cover the losses incurred when the home is rented out. You could reach out to your insurance agent to ensure that you are adequately insured. To reduce the cost, you can investigate whether an insurance provider would let the landlord insurance with homeowners’ insurance policy.
Factor in unexpected costs
It is not about the upkeep and maintenance costs that would eat into your rental income. You could always find potential for an emergency to crop up such as roof damage from a hurricane or pipe burst or an emergency in the kitchen. You should always plan to keep aside less than half of your rental income for maintenance-related costs so that you would have the funds to pay for timely repair.
Determine your return
For each dollar that you invest, you should identify the return on the dollar. Stocks might offer certain cash on return while bonds might also pay. Return that is reasonable in the first year is considered as healthy, being a landlord as several issues might arise over time.