10 Tips For Buying Rental Property
Category Advice
Buying the right property at the right time can be a great investment that will see you reaping many rewards for years to come. Investing in a rental property is a great way to get into the market initially.
Doing your homework is essential to a successful investment. So if you are thinking about buying a rental property, there are a few things to keep in mind that will help you navigate the journey and make an informed decision.
Here are 10 tips to consider before buying a rental property
1. Do your homework
Take some time to seriously consider all that owning a rental property entails and note down your plans and decisions. How involved do you want to be in managing your property? What price range are you considering? What kind of property are you looking for? Once you have an idea of your way forward, you can start your search.
2. Make sure you have financial margin
If you are shifting roles from tenant to owner, your budget will need some big adjustments. Owning a property brings a number of new expenses that you will be responsible for. Make sure you have enough margin for ongoing maintenance, emergencies, repairs, insurance, rates, upgrades, legal fees, managing agent fees, as well as savings for any unexpected costs.
3. Decide if you want to be a landlord
Being a landlord is about much more than collecting rent each month. Managing your property and dealing with tenants can be time-consuming, stressful, even draining if you're not suited to or equipped for the management aspect of the role. Will you have the time, energy, patience and disposition to be a landlord?
4. Look for the right location
People in the property world beat this drum over and over again, and for good reason. You ideally want to buy a rental property in a location that is increasing in value, growing in demand, and will bring you the highest return should you choose to sell.
5. Use a rental property agent
Don't underestimate the value that a seasoned property agent can bring to your search for the right rental property. The right agent will have a thorough understanding of the rental market, various locations, not to mention current listings available. Once they know exactly what you are looking for, they can be your eyes and ears on the ground.
6. Consider a brand new development
Buying a brand new rental property in a development with a clean slate can be a great way to start your buyer's journey. Purchasing a small unit to rent out is sure to generate plenty of interest in potential tenants, and be a nice source of passive income for you. You also won't need to do any major upgrades or maintenance for several years.
7. Be prepared for tenant vacancies
If you buy a rental property and rent it out, there's no guarantee that you will always have a tenant occupying your property. So make sure that you have enough in your emergency fund to cover your bond payments and other monthly expenses during those unoccupied months.
8. Know your rights and local property legislation
Knowing and staying up to date with local, provision and national property laws is essential. Make sure you're familiar with your rights and responsibilities as an owner and as a landlord. Make sure all administration for compliance, taxes, tenant deposit management, etc. is up to date and readily available.
9. Be aware of the risks
Aside from being prepared for vacancies and unexpected expenses, there is also the risk of exit costs, should you decide to sell. This simply has to do with the time it takes to sell your property. Exit costs can eat into your profits if it takes a while to find another buyer and for the sale to go through.
10. Consider using a managing agent
Buying a rental property is exciting, but managing it while tenants are occupying it can be a headache. Consider enlisting the help of a reputable management company who can handle time consuming aspects of managing your property, like meeting potential tenants, running background checks, and drawing up leases.
Need help navigating your rental property purchase? Give us a call!
Our team of seasoned agents have helped countless clients through all sorts of property purchases, including rental properties. We would love to meet with you to discuss your needs and set up some initial viewings. Contact an SAproperty.com agent near you today!
Author: SAProperty.com
