If you’re a first-time rental property owner, there are a lot to consider when buying your first rental property These tips cover everything from finding a good tenant to budgeting for unexpected expenses. And you can also find financing, which can be tricky. Here’s what to include on your first rental property contract. Hopefully, you’ll be able to avoid the common mistakes first-timers make.
Renting a property
It’s much easier to rent a property than to buy one. However, it’s not without its headaches and pitfalls. You should always ask a lot of questions before renting a property. These questions should include whether the landlord will be responsible for maintaining the garden or not, and if smoking is allowed. Make sure you ask the letting agent how much the agent will charge for services before renting a property.
Enforcing rules in your rental agreement is critical. If you’re too lenient, tenants will see it. It’s a good idea to allow a grace period if a renter doesn’t pay on time, but you should also enforce any late fees. You can also enforce a Notice of Entry rule, which typically requires a 24-hour notice before entering a rental unit. A landlord who enforces rules is more likely to have satisfied tenants.
Finding a good tenant
When renting out a rental property, you’ll likely be looking for good tenants – and bad ones, too. To find the perfect tenant, conduct a thorough screening process. Using Google or social media to look up an applicant’s name and past employment history will provide you with important information. You can also check the applicant’s background, including any evictions or criminal offenses. It may be useful to get an income insights report from a third-party company to determine the applicant’s level of affordability.
When it comes to screening potential tenants, it’s important to remember that each individual has bills to pay and prioritize what’s most important for them. You may discover a tenant who pays rent on the wrong day every month, or who brings home a new boyfriend. It’s possible your new tenant will spend the weekend or two weeks in the rental property – and you’ll have to worry about them ruining your investment property’s aesthetics.
Budgeting for unexpected expenses
When you rent out your first rental property, there are several expenses that you must plan for. Some expenses are regular but unpredictable, while others are sporadic and unforeseeable. However, knowing these expenses in advance will help you manage your budget and save money for future needs. In addition, you should budget for an emergency fund. To prepare for unexpected expenses, download a spreadsheet to keep track of your monthly and yearly expenses.
Securing financing
When it comes to securing the initial cost of a rental property, traditional mortgages are an option. However, they may not be the best option for a first-time investor or a buyer with little to no down payment. Fortunately, alternative financing is easier to obtain and can help you build your investment portfolio faster.
The first step to investing in your first rental property is to assess your financial situation. Determine the maximum down payment you can make, the house price you can safely afford, and any outstanding debts. Once you know your finances, develop a plan to pay off your mortgage and start making profits. Be sure to take the time to research the financial institutions you are considering. If you have a lot of credit card debt, consider putting off investing until you pay off your personal debt.