Buying a home is a good way to help you benefit from many tax benefits and deductions. Buying a home to rent out as a rental property is a great way to create an income stream from your property to supplement your current and retirement income. Here are two tips to help you be successful when looking at new homes for sale as an income rental property.
Hire a Realtor
If you were to begin your search for an investment property without the services of a realtor, you will be limited to finding properties that are listed on public real estate search websites and properties that have for sale signs in their yard. Trying to gather and compare all the information about each property could be difficult on your own. By hiring a real estate agent, you have their knowledge and all their available resources, such as the local realtor's multiple listing system. They will be able to search for, compare, and analyze properties that fit your requirements.
Look for a realtor that has experience with investing in residential rental properties. If they have this experience of working with investors, or they are a property investor themselves, you have the best resource to help you find a property that will provide you with a positive cash flow and will be rent-able on the residential rental market. Your realtor can help you determine market rental rates for the area you want to buy in and determine how much you can rent your property for. This is invaluable when comparing expenses on your cash flow analysis of a property.
Your real estate agent will be required to work for you while looking out for your best interest. Be sure you sign an exclusive agreement with your agent, which provides you with this protection as it binds your agent with this fiduciary responsibility. And don't worry about having to pay for the realtor's services, as they will be paid their commission by the seller of the home you decide to purchase. At closing on the property you purchase, they will receive their commission check.
Consider a Property Manager
After you have purchased your residential rental property, you may be tempted to save some money and handle all the management of the property by yourself. By doing this, you may find that you are spending a great deal of your extra time advertising and showing the rental property, screening potential tenants, handling maintenance issues, and collecting rent.
A property manager can handle all of this for you and more, which also frees up your time for you to put your knowledge to work in looking for your next rental property to purchase. They will also handle issues, such as, managing evictions, advertising your rental property, preparing the property for rent between tenants, and arranging repairs and maintenance on the property.
Make sure you consider the fee for the property manager in your cash flow analysis of your property. The average fee of hiring a property manager is approximately ten percent of the rent each month.
Use these two tips to help you invest in a residential rental property.
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