Rental properties are one of the best investments that you can make. Whether you are looking to bring in some side income that is going to help you to set up for retirement or you would rather cut out of your current job and do rental properties full time for an income, it is important to understand how these properties work and how they are able to help you to make this income. There are many different types of rental properties that you can consider and each one is going to have their positives and negatives for you to choose from.
If you are considering going into rental properties, make sure that you hire a local tax professional who is able to help you through the process. A good tax professional will be able to help answer your questions, keep track of your bookkeeping method, and ensure that you are making the most profit from the rental properties while still getting your taxes done the right way.
Pick a Good Location
The location of the building that you would like to use for this process is important as well. You could find a really great building that has everything that you want, but if it is located in the middle of nowhere or in a location that is considered bad for the town, you are going to have trouble getting the renters in or making some money. You have to be good at finding a building that is in the best location to bring in the renters that you want and won’t cost you a ton of money.
Keep in mind that often the best locations are going to cost more. This is because people will pay more to be in the best locations of town. You are not likely to find budget properties in these locations, but if you are able to work on lowering the price a bit, you could have an easier time getting people in. Usually looking just a bit out of this area, but still nearby can be the best bet for finding a good location and still making money from the rental properties.
Look at the Price
Before picking out a home or building that you would like to use for rental properties, you need to consider the price. You want to find a property that is going to come at a reasonable price so you can make a profit. You can find the best property in the world, but if you have to price it too high in order to make any profit, you are going to fail.
In most cases, you are going to need to put some work into the home in order to get the good price that you want. Looking for homes that are diamond in the roughs is the best. These are homes that are offered at a really low price because they look like junk and need work. But a professional or trained eye will be able to take a look at them and figure out a few simple and inexpensive fixes that will make them look amazing. You can get a good deal for a bit of work and have a good way to make some good money from the rental.
Consider the Right Building
There are several different types of buildings that you can consider when getting ready for your rental properties. They each have benefits and it often depends on the amount that you want to make on rental properties compared to how much energy you want to exert into the whole process.
The first option is a single family home. These are usually pretty easy to maintain and can bring in some great tenants who will often stay around for quite a while. This ensures that you are going to get a fairly steady income out of the property without too much work. But, you are only able to fit one person or family into each building and so you are a bit limited on the amount that you are able to make from this option.
Another option is a duplex. This usually has between 4 to 8 different apartments inside, but since it is smaller it will still show a lot of families and responsible tenants in the process. You will be able to make some decent money from this since you can get more than one family into each building, but they do take a bit more work compared to the single family home.
The third option is to choose an apartment complex. These can go from just a few apartments to a big huge building. This is going to bring in the most income if you are able to keep them full, but turnover of tenants is really high and the amount of maintenance to keep them looking nice can take a lot of your free time and is not the right choice for everyone, especially if you are first getting started.
If you are considering getting started in rental properties, it is important to find someone who is able to be by your side through the whole process. They will be able to answer your questions and ensure that you are actually making a good profit out of your endeavor. Contact our offices today to find a local tax professional to help you out.
Margaret Tabb