Should I Invest in Rental Properties?

If you're thinking about buying some investment properties to renovate and re-sell, or to rent out for extra income, make sure you do your homework before you commit to buying that "great deal."  Here are some points to ponder:

Make sure you understand the market and how much you can charge for rent for a particular type of rental in a specific neighborhood.

Check to see what your legal obligations are as a landlord (business owner). You need to have a basic understanding of landlord and tenant rights, in order to protect yourself.

Decide in advance if you will allow pets, as pet-friendly properties are in high demand.  To offset any potential damage, you should require a pet deposit.  

Protect yourself with general liability insurance, and consider requiring tenants to purchase "renters" insurance, which will protect their property inside the structure as well as protect you from financial loss as a result of a loss due to the tenant's negligence.  It also provides reimbursement (up to the policy limit) to the tenant to stay somewhere else should the property become uninhabitable due to a covered loss.

Make sure you have a system for keeping up with income, and expenses, including: repairs, property management fees, renovations, insurance, and property taxes. Many costs associated with rental properties are tax deductible.

Save all paperwork pertaining to the property, including: receipts, paid invoices, maintenance records, lease agreements, inspection reports, etc.

Take photos before and after renting.  Consider having the tenant sign a move-in inspection form, to document the condition of the property on the move-in date.

If you're unsure about legal, tax, insurance, or property management implications, consult a professional. Check Facebook or other sources for real estate investment groups near you.

Now get out there and see what's going on in the real estate market!