Making sure you can afford your next rental property

money5Investment can be a big decision. You do your research, you find the best route to take, and then you have to take that plunge. The more you invest, the more you might make back. Though, in some circumstances, it could be that you lose what you sink into it so you'll want to be careful and do all of your research.

Choosing to invest in real estate to rent out is no different. There are certain numbers you'll want to run and scenarios that you'll want to look at to make sure you really understand what your costs for the property will be and what the cash flow you can reasonably expect to see is. You can't plan for everything, but you can prepare for quite a bit. Remember that when you buy a property with the intention of renting it out, that rental money does not start coming in until you have a tenant, so you'll have to be ready for the time between when you put the down-payment down on the property and when you get your very first tenant to sign that lease and hand you a check. You'll need money for the down-payment on the loan, for any repairs needed, and for insurance. Once you have a date that you'll be ready to lease it by, you'll need to put it on the rental market and advertise. Applications come next and then tenant screenings and finally, once you make a decision, you can choose your tenant.

While the first check may be exciting, remember that a lot of that may already be spoken for. You will likely have a mortgage payment, property taxes, and if you have a property management company working for you, they'll take their share of that. You'll be responsible for the repairs needed to the property and for any upgrades you decide to add (these can make it more marketable). Keep all of this in mind when making that decision if you should buy your first (or next) property.

POSTED June 16 2014 11:37 AM

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