Rental real estate properties are a great way to make a certain income for a long period of life. But only if you purchase the right rental property. To do that, you need to make good preparations before you enter the world of rental real estate. Make sure you study every little detail because that little detail could cost you a considerable amount of money. Having that in mind, we decided to provide you with some important facts to know before buying rental a real estate. Those facts aren’t only numbers and market conditions. Those are the facts from the real life. We got the tips you’re about to read from some big investors. That’s where they made the mistakes at the beginning. Hence, if you don’t have a large amount of money to absorb the loss caused by mistake, pay attention before buying a rental real estate.
Important facts to know before buying a rental real estate
Collecting the rental real estate information, you must know that the numbers, the location, and the market condition are not everything. You’d be dealing with the real people, real property and real situations in real life. So you must learn how to prepare for everything that would come if you bought a rental real estate. To do that, we made an effort to single out the most important things to know before buying a rental real estate:
- Rental real estate isn’t easy money- Opposing to your expectations, be sure that earning from rental property is everything but easy.
- You can’t have guarantees- There is a risk in this kind of investment, nobody guarantees you that you’ll make money out of the rental real estate.
- The cost of an investment exceeds the cost of purchasing a rental property- Paying the initial price is just the beginning, be aware of that before buying a rental real estate.
- You must prepare for unexpected- Regardless of how careful you are, or how much you put an effort into your business, there are always some circumstances that will bring the unexpected costs.
- Renters could be the nightmare- Disgruntled tenants can destroy your rental property and bring so many troubles into your life.
Forget about easy money when thinking of rental real estate
It sounds pretty simple. You do the research. Find the best rental property available on the market. You purchase it and you become a landlord. The only thing that is left is to find the tenants. Right? Well, not really. There are so much more troubles. Basically, these steps are right. But neither one of those steps is easy, don’t fool yourself. It takes a lot of money, a lot of time and a lot of your nerves to successfully end each of those steps. Even though being a landlord is qualified as a passive money, you’re gonna be everything but passive. Be aware of that prior to your rental property investment.
There are no guarantees you’ll make money
Not only that it is difficult to manage a rental real estate. You also can have no guarantees that you’ll make money at all! Who knows, maybe you won’t be able to find the tenants for your rental property. Before buying the rental real estate, do a thorough research of the area where you’re about to invest money. Find out what people look for, how much money they pay for rentals, how often they change their homes etc. You could buy the finest rental real estate in an excellent location, be able to lend it for a decently low amount of money, and still not have a single tenant. Things like that happen. So prepare for that before you invest in rental real estate.
Before buying a rental real estate know that your costs will exceed the cost of property
Buying a rental property is only one part of the expenses you’ll have as a landlord to be. It’s certainly the highest expense, but it’s not the only one. After you purchase the rental property, you’ll need to invest some amount of money to make the property attractive to tenants. that amount will be higher or lower, depending on property condition. Still, some repairings are certainly needed, so prepare to pay for them. In the best case, that amount is 10-20% of property value, while in the worst scenario you could double the price of real estate you bought for renting.
There’s no such thing as ‘unexpected’ connected to rental property
Expect the unexpected when it comes to rental property. No matter how hard you work, or how much you pay attention, there are some things you can control. You should be aware of this prior to your rental real estate investment. When the unexpected happens, you must invest money and effort to do everything to repair your property. Your tenants might feel sorry for you, but still, they are paying the rent and you’re the one who needs to solve the problem. Regardless of what the issue might be. And those unexpected troubles are often costly. So have always some money to back you up if the situation like that happens. It won’t happen all the time. But it will happen eventually. There’s no rental property where the landlords had no unexpected troubles.
Truly good tenant is a keeper!
Before buying a rental real estate, know this: if you have luck and find good tenants, you should try to keep them for as long as possible. The most of the landlords say that good tenant is worth his/her weight in gold. Because truly good tenant is so difficult to find. The most of the tenants make at least some damage to your rental property. Ok, the most of those damages are not that expensive. But still, you want to have no expenses because of your tenant’s nonchalance.
On the other hand, your property could be seriously damaged if you have a tenant from hell. And they appear every now and then. They could draw on your walls, ruin your toilet, rip your rugs, break windows etc. There’s one thing you could do to try to prevent these things from happening. Don’t make your tenant angry. An angry tenant commonly becomes a bad tenant who could do even worse things than those we described.