Around 41% of all rental properties are privately owned by an individual.
As the U.S. population continues to grow, so too does the demand for rental housing. If you’re hoping to get involved in renting out properties, you might be wondering about how to make money as a landlord. You obviously want to get the best return on investment possible.
In this article, we’ve gathered five tips on how to make money from a property. Keep reading to learn more!
1. Find the Right Property
If you’re researching how to make money on a house, then the first thing you want to do is locate a property that’s in good shape.
One consideration to take into account is the neighborhood that the property is in. You want your purchased property to have long-term price appreciation. Other factors are the purchase price and size.
If you’re more interested in how to make money from your home, you can instead consider renting out a single room. Or, if you happen to have a fully furnished basement, you can also rent out this space.
2. Estimate the Cost of Maintenance and Repairs
If you want to help secure home profits from renting a property, you need to make sure it isn’t going to be a money pit. Before you purchase the property, you should have an inspection done to ensure there aren’t any hidden issues. Things like lead paint and asbestos can lead to extravagant repair costs.
If you buy a property that needs significant repairs and decide you’d rather fix-and-flip it, then have a look at various financiers who can assist with this.
3. Calculate Numbers
The ultimate goal of investing in a rental property is to make a nice profit. You should have a professional run the numbers to estimate costs for several years into the future. A professional will be able to help you determine what your total mortgage debt is and whether you meet the requirement for the debt-to-income ratio.
4. Research Similar Properties
Once you have settled on a property, the next step is to compare similar rentals and what their prices are. Properties you compare against should be of a similar size and have the same number of bedrooms. You do not want to price too low or too high.
For example, let’s say you notice that most three-bedroom rental homes are renting for around $1,000. However, your property has a wooden privacy fence around the backyard and the inside of the home is nicer than the pictures you see of the other properties. In this scenario, you can get away with adding an additional hundred or two to the price.
5. Find the Best Tenants
The last step is finding tenants who will rent your property. However, you don’t want just anyone. There are risks that come with renting a property, such as getting a tenant who damages the interior of the home.
Have potential tenants send in applications and ask for references. You should also run a background check and maybe even a credit check. When possible, your ideal tenant will be someone who will pay on time and intends to stay longer than a year.
How to Make Money as a Landlord Falls on You
We hope this article on how to make money as a landlord was insightful. There are many different factors to take into consideration to help maximize your profits and protect yourself against issues. In the end, do your due diligence and research.
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