3 Things to Consider Before Purchasing a Rental Property

Owning a rental property, finding good tenants, and collecting rental income every month is the dream for many Americans. While definitely an attainable goal, it’s not as easy as some may think.

For one thing, you must come up with the funds to purchase an investment property. You’ll probably need to fork over six figures to buy real estate outright or through a mortgage loan. But taking on that financial commitment might not be the wisest decision if you’re already struggling with high-interest consumer debt like car loans or credit cards.

Many people take the plunge and join the ranks of rental property owners. Some live the dream and have no regrets, while others jump in before testing the waters and see their dream turn into an unmitigated nightmare. You can avoid the latter scenario if you do your homework and fully understand what you’re doing and how much is at stake.

Keep reading to see three things you must know and understand before buying a rental property.

Finding Tenants is Hard Work

Have you watched some of those programs available on streaming platforms that focus on nightmare tenants? While some landlords are a piece of work, many landlord-tenant problems stem from people who rent units and then decide they don’t want to pay.

Landlords must still pay the monthly mortgage and depend on tenants to pay their rent on time. So, it can be stressful if you choose the wrong tenants and struggle to stay afloat.

One reason to hire a property manager is you’re more likely to find good tenants if you get help choosing them. A property manager will launch a screening process to find you the best candidates. They’ll request reference letters from previous landlords, run credit reports, request proof of employment and income, and do other things to weed out the riff-raff.

Keeping Up With Maintenance and Repairs Eat Up Lots of Time

When buying a rental property, you must keep up with maintenance and repairs. Failing to do this will cause the valuation of your property to stagnate or even decline. Your rental income generation potential will suffer if people rent elsewhere due to the shoddy maintenance of your property.

That’s another area where property managers excel. Finding one in your city is best. So, for example, if you own an investment property in San Marcos, Texas, hire a San Marcos property management firm. It makes sense to hire a service provider nearby for a good response time.

Providing Customer Service is a Full-Time Job

You also need to consider customer service. It’s a more energy- and time-intensive than you may think. If you don’t take care of your tenants and respond to their questions or concerns in a timely and professional manner, tenant satisfaction will dip. That could hurt you when the time comes to renew rental agreements. Dissatisfied tenants may choose to go elsewhere at the end of their rental agreements rather than renew.

As you might have guessed, customer service is another area where a property management firm can help. A property manager can provide tenants with the customer service they deserve. Working on your behalf, the property management firm will give your tenants a contact number. That means the tenants can directly contact the service provider about any issues, and the property manager will offer the required assistance.

While owning an investment property may be a dream, you’ll do better if you know what you’re getting into. Landlord duties aren’t optional. But you don’t have to do it all yourself. Hiring a property manager means you can outsource some or all landlord responsibilities. That could be the best investment you make as part of your rental property strategy.