Investing in Rental property in Real Estate: Your Complete Guide

Purchasing rental property can be a great way to get income while owning property and building equity. However, just like in any investment deal, buying a rental house does not automatically mean getting a great return. To make a rental house a great investment, you need to find the right piece of property in the right location. Once you do this, you need to purchase the property for the right price. Finally, once the house has been purchased, you need to be prepared to be a landlord.

When you decide whether owning rental real estate is a good investment for you, weigh the advantages against the disadvantages in order to make an informed decision. The following are just some of the many advantages to owning a rental property:

Current income, which is the rent money you will pocket each month after the mortgage and other expenses have been paid.

Appreciation, which is the increase in your home’s value over time.

Leverage, which means that you can purchase the rental home with borrowed funds, while only putting down a fraction of the money needed to buy, say if you quality for mortgage. You control the entire property and the equity it holds while only paying a fraction of the cost.

Buying a rental home can be a risky investment. This is particularly true if you do not do your homework and purchase property in a market that does not suit your needs. In general, rental property can expose you to the following:

Liability, which can occur when something bad happens to your tenants (i.e., a stair breaks and a tenant is injured). If you are sued, you will have to defend yourself in court.

Unexpected expenses, which occur all the time when you purchase property. While some issues can be easily fixed, if you have to replace a roof, wiring, or a foundation, you can quickly find yourself spending money instead of making it.

Bad tenants can avoid paying rent, destroy a home, and sue you for damages.

Vacancy, which means you can’t find a tenant and the house sits empty with no money coming in.

Purchasing and maintaining a rental home is a lot of work. As a homebuyer, you will need to do a lot of research to ensure the investment you are making is as stable as possible. This means you will have to analyze markets, hire help, and make important financial decisions. In addition, as a landlord, you will constantly be required to be working with the property and its tenants in order to get the income you expect.

Purchasing a home can take many months, if not years. Be prepared for this.

Being a landlord can last a lifetime. Unless you delegate this task to someone else, you will be a landlord for as long as you own the property and rent it out.

Before you make a huge investment in rental property, you need to make sure you are making a sound financial choice. On a general level, ask yourself whether your community has a robust market for rentals. Additionally, look at the number of listings and vacancies in the area where you are shopping. If there are a lot of them, it might signal that the market has gone bad. Also you need to analyze the average rental prices of units that are comparable to what you are looking at purchasing. After all, you need to be able to make money.

Purchasing a rental home means having to deal with real estate transactions, legal documents, and potentially even tax questions. For these reasons, it is important to hire expert help in order to make the best decisions possible. However, this help will cost you. You want to find someone that is both trustworthy and knowledgeable. The person you choose will be responsible for finding you a home that meets all your needs.

Rental property can come in any number of shapes and sizes. If you are interested in single-family homes, consider what type of home you want to look for. Maybe you want a big yard that will attract families. Think about a modern home that will attract high-income residents.

Once you know how much home you can afford, start working with your real estate agent on finding the best homes available. Talk to your real estate agent about what you are looking to get out of the property. Let him or her know that you plan on renting. In addition, sit down with your agent and discuss the following:


The makeup of different neighborhoods in your community. For example, if you are close to the local college campus, your tenant pool is likely to be mostly students. In addition, this location will likely lead to regular vacancies during the summer months when school is not in session.

Property taxes. You want to make sure you keep your overhead costs as low as possible. Try to find a location with reasonable property taxes.

Schools. If you plan on having families as tenants, you will want to be in a neighborhood with a quality school system.

Crime. Nobody wants to rent a house in a dangerous location.

Job market. Your tenants will most likely need to work in order to pay the rent. Help them by purchasing a home in an area with a quality job market.

Amenities. Tenants will be more likely to rent your home if there are things to do in the community. Look for homes near parks, hiking trails, movie theaters, and restaurants.

Whenn you and your agent settle on the perfect house, dive a little deeper and have an inspection done. Before you make any offer, you need to make sure the home is in the appropriate condition.

Make sure the inspector looks at the foundation, roof, wiring, building material, structural strength, and anything else you might think is important.

Before you make an offer on any home, you want to determine whether the home is likely to be a good investment for you. To do this, you need to estimate the cash flow you will receive from the property after you buy it. Cash flow is calculated by estimating the average rent you believe you could get for the home and subtract all the monthly expenses from that number.

Now you’re ready to close and invest. After this is done, it is important to make sure everything is ready to be rented.When you are ready, list your property on the rental market.

When a tenant confronts you about renting your property, have them fill out a lease application. The lease application should require the prospective tenants to provide you with personal information, financial information, references, and other information you can use to help make a decision about who to rent to. Do not rush during this process. It is better to go slow and get it right than it is to get a bad tenant quickly.

Make sure you call references and talk with them about the prospective tenants.

Run financial checks on everyone looking to rent. Make sure they have the financial ability to consistently pay the rent.

When you have selected themost suitable tenant,If you have a lawyer, have them draft the lease for you. It is absolutely vital to make sure your leases are legal. If you do end up litigating with a tenant, you want to make sure your lease will hold up in court.

Investing in rental properties can bring manifold rewards, ensuring a lifetime of constant cash flows and gain on your property when done right, and carrying out the thorough check lists, such as the ones mentioned above. If you’re looking to invest securely in property that can provide you impressive rental income please check out WestWood Nooks and Urban Prime One Lavadia on our portfolio listing(include links to these).

Our spacious modern apartments with brillant infrastructure situated in the most desirable locations within the New Lekki Axis are great buys with impressive ROI that make for the most desirable planned and smart living.

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