Have you been thinking about different investment opportunities? Not sure where to start investing?
The wise young man or wage earner of today invests his money in real estate.Andrew Carnegie
Investment properties come with several benefits. These include:
- Earn extra income from rental payments
- Increase your wealth as the property value rises over time
- Get certain tax deductions depending on your situation
- Diversify your investment portfolio
- Your tenant’s rent helps cover the mortgage
- A guaranteed vacation spot when your vacation rental is vacant
Understanding investment properties
What to know if you’re thinking of buying a rental property of your own
In order for your rental property to be profitable, location is extremely important. Would the property attract potential tenants? Is there a high demand for rentals in the area? You also want to make sure the property can generate enough rent income to comfortably cover your mortgage, plus property taxes, repairs and HOA fees.
Investment properties require a higher down payment if they’re not owner-occupied. It’s typically a 20% minimum, but keep in mind interest rates may also be higher on investment properties.
Rental property insurance or landlord insurance, different from homeowner’s insurance, covers property damage, lost rental income, and protects against liability. A business owner’s policy is common with vacation rentals, since you’re basically running a mini hotel.
Which features should you be looking for?
- property type you are interested in investing in (single-family, condo, duplex, townhome, etc.)
- school and neighborhood quality, as well as convenience to major highways, employers, and retailers
- developed areas where there is a high demand for housing
- search other rentals in the area to gauge what type of rentals are currently on the market, and what type there is an undersupply of
When finding tenants remember to…
☑️ Run a credit check
☑️ Verify income
☑️ Do a background check
☑️ Require renters insurance
☑️ Request references
☑️ Consider hiring a property manager
Difficult tenants are a common problem in the rental business. As a landlord, it’s to be expected that not every tenant will be ideal. However, thorough tenant screening will ensure you choose the best possible tenants for your property.
Be aware that vacation rental regulations may vary depending on where you live. Check into your local laws before listing on any site, such as, AirBnB or VRBO.
Ethan Burton | 606-282-3821 | Search Central Kentucky Properties