The Beginner’s Guide to Owning Rental Property

Thinking of purchasing rental property?

1. Will the property provide a good rental return?

Factors to consider – Area, Price, Type of Property, Condition of Property.

a. Price b. Type of Property

d. Condition

of Property

c. Area

Look at the rental income of other nearby properties and then look to buy a property at less than 12 times the annual rental income.

Is the property in an area which is going to be attractive to people looking to rent? Access to transport links, shopping, schools, parks etc.

In the area you are looking is there a better return on a single family home or an apartment? Do your maths.

You may make a better capital return on a property that needs renovating, but factor in the loss of income whilst the property is being renovated and your management time and you may decide it’s not for you.

b. Property Taxesc. Insurancea. Loans

Thinking of purchasing rental property?

2. Can I afford to buy the property?

Factors to consider – loans, property taxes, insurance.

For non-owner occupied properties the interest rateIs normally higher and a larger deposit is required.

You’ll need buildings insurance and it’s wise to also take outLandlords insurance. Check the requirements of your loan.

Do you research and understand your local property taxesbefore you commit to buying the property.

1. Rental incomeFingers crossed if you have great tenants 1. Rental incomeFingers crossed if you have great is income 2. Property Value Appreciation The Value of your property can increase over time. to work for.

for. 3. Sweet equity Normally, if you invest time in updating the property you will see an increase in property Value

Thinking of purchasing rental property?

3. Pros and Cons of buying a property for rent

Pros and cons.

a. Pros

1. Rental incomeFingers crossed if you have great tenants then this is income you don’t have to work for.

b. Cons

1. Unexpected costsGet a detailed survey before you buy. If you end up with major costs you will be watching your rental profit disappear.

2. LialilityAs the property owner it is ultimately your responsibility to protect your asset.

3. Tenant riskYou can’t guarantee your tenant will pay their rent and look after your property, but you can work with a reputable agency and have prospective tenants carefully screened.

Thinking of purchasing rental property?

4. Is it worth remodeling your property to maximize profits. Update the kitchen and bathrooms and your property will be easier to rent out, have less maintenance problems and may even enable you to change higher rent.

Thinking of purchasing rental property?

Thinking of purchasing rental property?

5. Get the property rented. Set out your tenant requirements and stick to them.

Thinking of purchasing rental property?

6. Find a property to rent out. In summary this is the process:

a. ResearchThere are no shortcuts here. Unless you are very lucky, it is vital to research the area and the property thoroughly. Always thinks of the property as a prospective tenant.

b. Calculate Cash FlowAssume some empty periods, maintenance costs and factor in any insurance, management and property manager fees. A good property manager will be someone you can run your spreadsheet by to see if you have taken everything into account.

c. FinanceNormally you will need to make a larger deposit for a property you are planning to rent. Take specialist advice and secure the best deal you can.

d. BuyNow you’ve gone through all background research and found the perfect property it is time to complete all the paperwork and buy property.

e. Set Rent PriceHave a look round the market, but this is also a very good question to ask a prospective property manager. A good property manager will have in-depth local market knowledge and should be the best resource for establishing a rental price.

f. Hire a Property ManagerTalk to your friends and find out who is recommended in your local area and then meet up with several agencies and not only compare terms but try and establish who you would find easiest to work with. It may well be worth paying slightly higher fees for a more efficient and knowledgeable service.

g. Screen TenantsAgree with your chosen rental agency your parameters for what would be acceptable tenants and stick to them. Common requirements are non-smokers, no pets and tenants in full time employment.

Thinking of purchasing rental property?

Contact UsAnnapolis Property Services LLC. 914 Forest Drive,Suite 101, Annapolis MD 21403 Sales inquires: +(410)695 6151General information: info@AnnapolisPropertyServices.comProspective Resident inquires: Sales@AnnapolisPropertyServices.com Management Services: Peter@AnnapolisPropertyServices.com Websitehttps://www.annapolispropertyservices.com/