Have you ever considered buying a home strictly for use as a rental property? If you haven't, this may be a good time to start.
In all likelihood, it will be a good investment for your future, but there are some things to think about:
Of primary importance is your willingness to be a landlord. It's not for everybody. Do you have experience with tenants? Is there a steady stream of tenants in the area? Are you going to be close enough to get to the property in case of emergency or other situation? Who will handle repairs and maintenance? How will your insurance coverage change?
Keep 'em in the house
For a rental house, it's obviously a goal to keep tenants in the property. Almost as important is to make sure that what the tenants pay covers your expenses of owning the home. These expenses should include mortgage, tax, insurance, and maintenance. If you can break even, you enjoy available tax benefits and profit from the overall appreciation of the property. Additionally, rents tend to go up over the years while your mortgage payment, assuming standard financing, is fixed.
Ensure your insurance is appropriate
Your insurance coverage will be substantially different as well. Landlord insurance can protect you from loss of income in the event that the property becomes uninhabitable, like in the aftermath of a fire, or during a tenant/landlord dispute. The Texas Department of Insurance has a great Web site that offers all kinds of information and help for those seeking all kinds of insurance.
Talk to an expert
Finding a house that will turn into a performing asset can be tough. I recommend that you use the services of a Texas Realtor who specializes in investment property. Your wants and needs are much different from a retiree or a first-time homebuyer. Your Texas Realtor will understand this, and may even own investment properties himself.
He can also provide some history about the neighborhood and other valuable information and may be able to give you a pretty good idea as to the estimated cost of certain repairs.
Can you manage by yourself?
Once you've acquired the property, you may consider hiring a property management company – particularly if you're not located close to the property or you have more than one rental unit. Many Texas Realtors specialize in property management and can screen tenants, collect rent, inspect and maintain the property.
Fix what's broken
Are you handy? If you are, that's good; but if you're not, make sure you know who to call. Be ready to make some repairs. Tenants expect things to be right – in fact, that's why many of them choose to rent.
Your Texas Realtor may even have a vetted list of contractors to help you with any projects.
Another option you may want to explore is purchasing a home warranty for the property, which will cover the appliances, electrical infrastructure, and the plumbing. These warranties are typically affordable and give you peace of mind. Be sure to read the policy to know exactly what is covered.
There are pros and cons to owning rental properties, but if you've got what it takes and your financial situation allows for it, it's an excellent way to accumulate wealth.
For more tips about real estate in the Lone Star State, visit TexasRealEstate.com. – the online source for consumer-oriented real estate information.
For your real estate needs, please contact RE/MAX Genesis at 830-833-2000.