Buying a rental property? You'll need this tip.
One of the best things you can do when you buy a rental property is to learn from the mistakes of others and understand what really maximizes your rental property income.
The tip: A better rental price attracts better tenants. Owners tend to push rental prices higher to maximize their investment. But in the long run, trying to get the highest price for your rental could backfire.
Successful landlords have learned to price on the lower end of current rental prices. The rationale: The larger pool of applicants will allow you to choose a better tenant, one that will stay longer, creating more stable income for you. Remember, if you are constantly having to re-rent a property, vacancy months will turn a higher rent into a lower return on your investment over time.
The best spring home improvement investment you'll ever make
Paint your house. It's the single best investment you can make, and spring can be a great time for a fresh coat. You also might get a better price before painters start to get busy again. Real estate journalist and author Tom Kelly shares this story: "I knew a cheap guy who was so cheap, he painted his own house every spring. Not the entire house, just one side, and it always looked great. And he took extra care with the side facing the street. Paint, it's the best bang for the buck you can get."
Sometimes, you decide exactly when you'd like to move. Other times, life swoops in and decides for you. Your company might transfer you, a family emergency might require relocation, or you might finally find the love of your life—three states over. Should you sell your house or hang on to it as a rental property? Here are 5 important considerations.
Or do you need an exit strategy? If there's a good chance you'll return to your current home in a year or two, the money and time you spend selling your home and then buying a new one might make renting it out a smarter option.
Look at online rental sites to see what properties in your neighborhood and in similar condition to yours are renting for. Are there a lot of listings? Think about what you might charge and what you might have to do to bring your property up to the market standard. You can then get an idea whether your potential rental income will cover your expenses.
A lot of factors feed into property values, from national trends to long-term construction plans. An agent can help you understand your property's potential for appreciation and whether or not it might pay to hang onto it.
Unless you pay for a property management company (about 10 percent of the rental income), dealing with issues, emergencies and uncooperative renters (sometimes all at once, often in the middle of the night) can be trying. Ask yourself if it's worth the stress.
Each situation is unique, so before you decide to rent out your home consider talking with a tax professional. They can help you figure out how much you can expect to pay in taxes on the rental income.