Is Owning Rental Property, For You? is one of the best posts about Property Investment. There are many articles on the web that examine Property Investment, Is Owning Rental Property, For You? certainly one of which we suggest for you. Ideally the posts that individuals communicate below may be of good use, raise understanding and be described as a solution for you.
For some individuals, owning, and operating, rental, real estate properties, is a great idea, while, for others, this might not be the case! The difference, not only applies, to the specific property, but, also, each individual’s personality, attitude, and personal, specific strengths and weaknesses. Some factors include, of, course, financial ones, including the necessary reserves, needed, for purchasing a property, starting with the down – payment, closing costs, reserves for repairs, upgrades, renovations, and contingencies. In addition, some individuals are better – suited, for, owning rental property, than others, because some, do not want, the stresses, and tensions, involved, in this type of commitment. With this in mind, this article will attempt to briefly consider, review, and discuss, a few of the key factors and considerations, one should thoroughly explore, in – depth, prior to taking the leap.
1. Personal financials: Do you have the necessary funds, and will you qualify, for whatever financing, might be required? Obtaining a mortgage on a non – owner – occupied property, is significantly different from the process, regarding, one for a personal home. In most cases, a larger down – payment is required (often 25% – down, instead of 20%). In addition, the requirements differ, because not only, must you clearly demonstrate, the same things, you do, for a personal loan, you must also demonstrate, the property is viable, from a financial standpoint, and the rents, will handle the cash flow. It’s important, to have, several reserves, including: a) repairs; b) renovations; c) upgrades; unanticipated contingencies, etc.
2. Property financial issues: I am a believer in the 6% – rule, which means, the net return, should be 6%. For example, one factor is the cash flow, while the other is the overall rate of return, or return – on – investment/ ROI. Therefore, if you purchase a $500,000 property, put $125, 000 down, and have a $375, 000 mortgage loan, and the rate is 5%, your principal and interest, on a 30 – year, fixed – rate vehicle, will be approximately $2,000 per month. If the real estate taxes, and other escrow items, including insurance, etc, are, for example, $12, 000 per year, or $1, 000 per month, your total, out – of – pocket, each month, is approximately, $3, 000. If you estimate, upgrades, repairs, etc, are another $12, 000 per year ($1, 000/ month), you should use this $4, 000 per month, figure, for your preliminary calculations. In addition, base you revenues, on having each unit, unoccupied/ vacant, 2 months per year, to proceed conservatively. This means, you should collect a rent – roll, total, from all units, of at least, $4250 per month. In addition, you should be ensured, your net income, must generate approximately $32,000 per year.
3. Dealing with maintenance issues: Are you comfortable with these challenges and responsibilities?
4. Dealing with tenants: Are you ready, willing and able, to deal with tenants, and collect rents, enforce leases, meet the needs of a tenant, and the personality issues, involved?
5. Opportunity costs: How does the owning of these properties (remember to factor in appreciation, depreciation – benefits, and net income, compare with how, you might do, with other investment vehicles?
Is owning rental properties, suitable for you? Consider the advantages and obstacles, and proceed wisely.
Thus the article with the title of Is Owning Rental Property, For You?, that individuals share and is obtained from different sources on the internet. You may get more different related articles on the class page Investment in Property.
Real Estate Investment Shrewd Or Foolish? A Contrarian’s View is one of the greatest articles about Property Investment. There are numerous posts on the internet that discuss Property Investment, Real Estate Investment Shrewd Or Foolish? A Contrarian’s View one of which... Read More
6 Tips for Taking Your Real Estate Investing to the Next Level is one of the finest posts about Property Investment. There are lots of articles on the internet that discuss Property Investment, 6 Tips for Taking Your Real Estate Investing... Read More
How to Become a Successful Real Estate Developer is one of the best articles about Property Investment. There are many articles on the web that discuss Property Investment, How to Become a Successful Real Estate Developer one of which we recommend... Read More
How to Buy Belize Real Estate is one of the greatest articles about Property Investment. There are numerous articles on the internet that discuss Property Investment, How to Buy Belize Real Estate one of which we suggest for you. Preferably the... Read More
Koh Samui Investment in Condominiums, Condos and Choices For the Lifestyle Investor is one of the finest articles about Property Investment. There are numerous articles on the internet that discuss Property Investment, Koh Samui Investment in Condominiums, Condos and Choices For... Read More