3 Things To Look Into Before Buying A Rental Property
Real estate can either be a really good investment or it can drain your wallet. To make a good real estate decision, there is a list of things that you will have to look for including a good neighborhood, a low price, and good resell value. When it comes to buying an investment property though, there are a few additional things that you will want to take into consideration to make sure you are making a good investment overall.
Make Sure You Can Charge Enough Monthly Rent
While your mortgage on your rental property may only be $1100 a month, you will want to make at least that from your renters every month to cover all of the expenses. If you are wanting to make a really good investment, you will want to make substantially more than that every month so that you can pay the property off faster.
When you are determining just how much money to charge in rent, compare all of the other rental properties around you and then take a look at yours. Is yours larger? Is it nicer? does it have more amenities? If your place is more updated and larger then you can clearly charge more, but you still want to remain competitive.
Look at the Property Taxes
While owning real estate in certain zip codes may seem like a great investment in the long run, look at how much money you will have to pay in taxes every year. Even once you pay off your property, you are still obligated to pay property taxes which may end up being thousands or tens of thousands of dollars every year. Take a look at how much you are charging in rent and make sure that it can cover your property taxes so that when tax season comes around you aren't hit with a huge bill. One of the best things to do is to have your taxes factored into your mortgage payment; that way you don't even have to think about it.
Calculate Your Income Taxes
In addition to paying property taxes, you will also be liable to pay income taxes on your rental property. Why? Because you aren't living there, but you are getting an income from people. Although you can deduct any expenses like repairs from it, you will still have to pay on how much rent you get which may help you determine how much you will want to charge in the future. Contact TEU Real Estate Corporation to learn more.