Investing in the real estate business can be very profitable. The returns in terms of time and money are extremely satisfying. A good deal provides for a comfortable lifestyle. If you love the real estate business but do not want to get into the stress of heavy selling, consider renting out your property. Managing rental property is a favorite second career for real estate salespeople. It is a classic retirement option for brokers in a position to pick up income-producing bargains. If you keep a rental property in good repair and working order, your investment in property will go on generating constant income for a very long time. 

Best option for Investment In rental property 

A property that is reasonably priced and located in a prime area of the town is always in demand for rental purposes. Many real estate investors, who are interested in investing in rental property, like to keep some rental property in their portfolio for ready cash flow month over month. This ready cash helps tide them over during lean periods of business. In the real estate business, one must have enough cash to survive and maybe even lay out expenses in fees and overhead for a prolonged period of time after acquiring a real estate broker license. The steady cash flow from investing in rental property also provides a base for potential prospects.

Condominiums are the best option for investing in rental property. A condominium in an ideal location¡ªlike near schools, work, health facilities and public transportation¡ªis a very attractive proposition for rental property investment. Most of the time, they are often lower priced than single-family homes. The condominiums in ¡°move-in¡± conditions or with terrific views or located on seaside command higher prices but are a source of high rents as well.

Safeguards For Investing In Condominiums

• There is one important safeguard to watch for when buying a condominium for investment and rental purposes. Condominiums are governed by a set of Condominium Documents, or CC&R¡¯s. A Homeowners Association ensures that the rules set down in these documents are followed sincerely. Their most important stipulation or rule for rental property is that rentals are permitted only one time every year. Following this rule may not be a problem if you manage to find a tenant for an annual rental property. It can be a problem if the rental property is located in such a location that tenants want to rent it periodically only. Do go through the set of stipulated rules carefully before buying the particular condominium to safeguard your returns from investing in rental property. 

¡¡

• When you offer to purchase a condominium unit, you will be given the condominium document to be reviewed and approved in limited time. These documents are often lengthy and cumbersome to read. Be sure to ask for these documents well in advance of your closing date. Show these documents to your attorney for legal counsel before making a decision regarding investing in rental property so you do not miss out on any nagging detail that might prove bothersome later. Clarify any objectionable details as soon as possible before the final purchase. Keep a special look out for the rental provision in these "condo docs."

¡¡

• After going through the ¡°condo docs¡± before final closure, go in for a complete home inspection. Title search and loan application fees are other big expenses you will incur on purchasing condominium rental property.

¡¡

• A well-run homeowners association should be run like any good company or corporation, with a balanced budget and adequate allowances for reserves for repairs, such as roof, air-conditioning, paving, painting or pool and gym upkeep. Documents for any special assessments planned for the near future, too, should be available to you before the final decision regarding investing in rental property. You would not want to be burdened with any hidden expenses after you have rented out your property. So, the other two most important details to look at before investing in rental property in a condominium are the budget and the amount set aside for reserves by the homeowners association for emergency or routine repairs.

¡¡

• Most condominium budgets spell out the useful remaining life of the major systems in the rental property. One look at the document will determine how many years are left before the building requires repainting, roof replacement, replacement of essentials, repairs of heating or cooling systems, resealing of driveway, changing a pool filtration plant, and many other essential services.

¡¡

• By taking a close look at all these details, you can prepare yourself for any unexpected expenses related to investing in rental property. This will also help in determining the amount of rent you need to charge from your future tenants, so as to cover all your costs and a fair return to your investment in rental property.

¡¡

Review the condominium documents soon after escrow is opened. It keeps you well prepared for the closing deal. A condominium in a popular resort area or any good location has high rent returns and is a very option for investing in rental property.

 

Do you own real estate articles or stories and want to share with other investors? 
You have chance to win $100 Amazon Gift Certificates. We will give away 3 prizes for top authors each month!

Email your articles or stories to:  articles@buyincomeproperties.com

 

© Copyright 2001 - 2010 by BuyIncomeProperties.com               

 

 

Visit Real Estate Forums for every real estate investing topics!  Enter Here

    

Top of Page