How to Invest in Rental Property

Join the ranks of thousands of people who have discovered that investing in rental property can be profitable - and even enjoyable!

Instructions

Difficulty: Moderately challenging

Things You’ll Need:

• Purchase Agreement
• Real Estate Agents
• Real Estate Attorneys
• Tax Services

1. Determine what type of rental property appeals to you - a single-family residence, multi-family unit, commercial property, or a vacation home.
2. Narrow your search by focusing on available properties in a particular area.
3. Obtain comparable prices for similar properties in the area from a local real estate company.
4. Estimate possible rental income from a particular property, based on current rental prices for similar properties, found in the classified section of your local newspaper.
5. Determine possible cash flow (or loss) for the property by subtracting taxes, insurance, mortgage payment, maintenance, repairs and other expenses from the estimated rental income.
6. Consult a tax advisor about the tax consequences of investing in rental property.
7. Ask an attorney or real estate agent to review all contracts and agreements before submitting an offer.
8. Make an offer based on comparable prices for similar properties in the area, subject to appraisal, loan approval and thorough inspection of the property.
9. Determine who will manage the rental property.

Tips & Warnings

• Establish and maintain an emergency fund to cover unexpected repairs and expenses on your rental property.
• Mortgage loans for rental property usually require larger down payments with higher interest rates, than mortgages for owner-occupied properties.