Owning a Rental Property By Adil Esmail At Isnare.com Ezine Articles

It sounds simple enough: you buy a rental property and let your tenants pay your mortgage while you watch the money accumulate in your bank account. But is it really that simple?

Before you buy an investment property, make sure you do your homework. A property that looks great on paper may not stand up to an investment analysis. You want to determine what is the CAP rate of the property i.e. how much the return on your investment will be. You also will want to do a cash flow analysis to ensure that the property will make you money.

When you purchase a rental property, you are responsible for all the normal costs of ownership such as mortgage, taxes, insurance, etc. You are also liable to pay for the upkeep and repairs needed to your property.

The tenants you place in your units should be carefully screened to avoid any issues later on. Prospective tenants should fill out an application and provide enough information to allow you to do a background check on them. Check their credit history, confirm their employment and talk to previous landlords. Do your homework now because once your tenants are in, it will be very difficult to get them out.

You should have your tenants sign a lease. This contract should indicate the amount of deposit needed, the notice you will give for inspections, what type of maintenance will be the tenants responsibility, etc.

You want to make sure that you carry out your end of the deal by keeping the rental property in good shape and responding quickly to your tenants demands for repairs. Keep your tenants happy or you may end up with tenants withholding the payment of their rent until repairs are made.

A rental property will require more insurance than a regular home. Make sure that you have enough insurance to cover any serious repairs such as roof, air conditioning, carpets, and so forth.

Make sure that you keep accurate records of payment dates and amounts. Encourage your tenants to pay on time but don’t panic if there is an occasional delay of a few days. You may even request a number of post dated cheques from your tenants.

Chat up the neighbors once in a while. They will be able to tell you if your tenants are acting as good neighbors. If there are reports of excessive noise, suspicion of illegal activities, and such, discuss the matter calmly with your tenants. If you require legal action to resolve an issue, try to go with arbitration. It is cheaper and faster than court proceedings and usually have happier outcomes for both parties.

If you want to have good tenants, act as a good landlord. Do you part to keep up the property in good condition and to upgrade it as needed. A nicely renovated property with clean and airy units will rent more easily and for more money than a slum. It will also protect your investment and ensure that your property appreciates over the years.

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