There are many different aspects of owning a rental property that you should take into consideration before you make a purchase. Every investment opportunity has its benefits and drawbacks but owning a rental property can be more about your time and personal involvement preferences. Unlike buying stocks or bonds, a rental property is going to require an active involvement if it is going to be successful.
One of the first perks that many potential landlords consider is the ability to write off more on their taxes. It’s true, there are some additional tax advantages but it is certainly not all of the expenses connected to the property. And the items which are deductible need to be carefully recorded to ensure that you are not causing yourself trouble during a future audit. Utilities, maintenance and association fees are easy to track but you will need to keep detailed notes to track your mileage associated with managing and caring for the property.
A few years back when the Phoenix housing market tanked, you could find homes priced reasonably enough to pay cash. But the market has rebounded and you are not likely to find bargain basement prices any longer. So you will want to do some research and be sure that you are making a sound investment. Knowing the rental market in the area, the potential rent on the property you are considering and the cost of any repairs or renovations that might be needed is crucial in determining a good potential rental property. Knowing what your total investment will cost and how much you will be able to charge for monthly rent is a big factor in turning a profit.
But once you know what the property needs, you need to decide how much of the work you can do yourself and how much time you can devote to the project. Once you own the property, it is costing you money each day that it is not rented. Can you cover the carrying costs while you make the repairs on weekends or is it wiser to spend the money on a contractor and have the work completed in just a week or two? And once the work is done, will you be able to devote the time to taking calls and showing the property to potential tenants?
Once the property is rented, your work is still not done. Who will be the emergency contact when there is a repair needed at the property? Did you budget into your cost for a management company? Are you willing to go to the property during a storm to see why the roof is leaking or to fix a broken toilet or leaking pipe at 11 pm? All of these issues could be time commitments for you or financial investments if you need a third party to complete the tasks. Deciding how involved you want to remain in your investment will help you to determine if a rental property is a good investment for you. Visit www.azrealestatewholesale.com to learn more about purchasing and owning a real estate investment property.