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| *Ostroff, Fair and Company>>>Renting & Real Estate |
I want to buy a house and rent it out. What things should I watch out for? |
I want to buy a house and rent it out. What things should I watch out for? If your paying cash for the house all will be well but if your going to get a mortgage check first.I know when I bought my home the mortgage people asked me if I was planning on renting I said no but why do you ask.They told they cant give a mortgage to people who are going to rent the house.I am not sure if all companys are like that but I think its worth checking it out. Watch out for ppl with fake ID and social #. even if ID fake, you run a test, it will show no bad record. I went through this problem. The tenant mess up my house bad. Make sure you take first and last money, to be on the safe side. And look at the person closely before renting it out. Most people really good at acting as a nice, clean, responsible person. Experienced Renting it out!!! Tenants can be a real nightmare and a huge liability. Before you buy, do the math. regardless of if you put money down or do 100% ffinancing make sure the property has positive cash flow. To do this, add up all monthly expenses (Mortgage, Taxes, Insurance, Utilities, etc.) and subtract it from the rent you receive. If your rent does not cover your expenses, you will have to continue to "invest" in your property. There are two exceptions. 1. If you are living in part of the property 2. If you are fixing up the property and will make money on a higher value If your property cash flows, do your research on the tenants. get a credit report and ask for previous landlords as references. Don't rush into a lease just because they are can pay the first months rent Good luck Save yourself money , time and aggravation don't do it its a nightmare . The majority of people that rent are slobs , they don't care about your house . I speak from personal experience i had a rental property for ten years and you would not believe the way some people live or the mess they left in the house . I had a few that just up and left without saying anything . I'm not talking about low income people i'm talking college educated " INTELLIGENT" more like ignorant people . I sell houses for a living and can tell you without a doubt, make sure your house is nice enough to rent to a person with GOOD CREDIT! Those with bad credit will make every excuse in the book to keep from paying your rent on time. Your question leaves me with lots of questions like, where you are thinking about buying and have you checked the average rate of rent (ask the real estate agent for this info, they should be able to give you an answer if they are any good). Is it a good time in your area to do this? Make sure factories are on solid ground to make sure your economy can handle it. How many bedrooms do you want to offer? This will decide the type of client: small house-single person, big house-family. Do you have a lawyer, are you familiar with contract law and can you access a credit reporting company. Are you familiar with your local codes regarding renting homes? Is there a flood plain near by where you want to buy in? Are you interested in doing a Land Contract with the rentor? Have you learned the tax regulations for renting a home? This is a big project and making sure you can afford the monthly expence is very important. When renting, make sure the renters rent is no more than 28% of their monthly income. Make them get a renter insurance policy, paid from start to finish of the contract. I also suggest you get an extra deposit for animals. And, get a bank account to put their security deposit in and don't touch it! As to appliances, if you are new to this, you might want to rent some because of the warrantees. Buying new is rediculous because renters just wreck them. Get first and last months rent plus a deposit which is usually the same amount as a months rent. You need to make sure you add your own costs into the rent like mortgage, insurance, taxes, maintainance etc. Good Luck...renting a home in some states just plain sets peeps up for living for free. In Indiana, it can take up to a year to get someone out of a home. They live there rent free in the mean time and you carry the bill! |
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