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Buying rental property can be a risky investment, but it can also be a fun and rewarding experience that adds some cash to your bank account. Before you jump into the job title of "landlord", there are some things you must consider. 1. Find out if you even qualify for a second mortgage. Know your credit score before you even apply for a loan. You will likely need an excellent credit rating, not just good or ok, to get approved. Another deciding factor is your debt to income ratio. The bank wants to know if you are going to have the funds for this loan. 2. Decide what kind of real estate property you want to purchase. There are a lot of options when deciding to invest in real estate. The scope of it all depends on how aggressive you want to be and how much money you have to spend. Single-family homes, apartments and duplexes, commercial buildings and even vacation rentals are all possibilities. 3. Enlist the help of a real estate agent. She will steer you towards good rental locations and help you determine the market value of the surrounding properties. When you buy rental property, you want to make a profit so the market value of the house should be in-line with or lower than the rest of the houses in order for you to get what you want for rent. You may not make a lot your first time out, but if you only get the mortgage amount and the management fees, you are still building free equity in the property. That is quite valuable and will allow you to make more down the road. 4. Crunch the numbers. The whole point is to make money right? Once you find a piece of real estate, determine how much it will cost to make any repairs or upgrades, if any, to get it rent ready. Figure in these costs with the mortgage and insurance, what you want for rent and the cost of hiring a manager if necessary to determine if you will be in the black, flat-lined or hemorrhaging money. Another financial consideration is whether or not you can afford for the place to sit empty and for how long you can afford this. Also, you need to decide if you have back-up funds in case a renter defaults or skips out leaving behind a damaged property. (Screening renters helps reduce your risk of this happening.) 5. Hire a rental manager. This is very important if you do not live near the rental property. You need to hire some who is trustworthy and doesn't take a huge chunk out of your monthly profits to handle issues that may arise with the real estate property. Buying real estate as a rental property and becoming a landlord carries a lot of responsibility. Even if you hire out the management of the property, you still have to make sure that business is being taken care of and that the renters are happy as well as abiding by the rental agreement. Being an investment property owner can turn into a fun side business or even a full-time job as long as you have the credit and the resources to do it. Credit rating, kind of rental property, affordability and hiring a property manager or not are a few areas where a real estate agent is trained to guide you. To buy, sell or rent real estate in Asheville, North Carolina, visit www.preferredrealestatecenter.com
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