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Understanding Rentals And How To Manage Them

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This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

Rentals refer to properties that are leased or rented. Before renting out a property, consider that you'll be dealing with tenants. As tenants can potentially be quite a bit of trouble, you will need to screen them. A good way to manage rentals is hiring a professional company for managing the property, rent collection and dealing with tenants.

Real estate rentals have certain distinct advantages. Buying properties in a downturn and leasing them out to tenants is a well-known strategy for riding a downturn. You not only buy at rock bottom prices but also get a regular rental income. Additionally, there are tax benefits of renting out property.

Whether you manage the rentals in 2017 yourself or hire a professional company for the job, following are the basic factors related to real estate rentals that you need to consider before renting out your property:

Rent

Rent will be the single most important factor associated with rentals. It is extremely important for you to know the local market conditions and the rate at which properties are renting. Compare with similar properties and then work your numbers carefully. This is all the more important if you've taken a loan to finance the purchase of the home you're renting out. If you calculate incorrectly, you may end up with negative cash flow.

Expenses

You need to assess the expenses involved. A casual approach to estimation is not advisable. It is important for you to consider each and every expense that you'll incur. You will also have to factor in the possibility of vacancy because there is no guarantee that the property will always remain rented. Regardless of whether you will be hiring a professional for managing the property or doing it on your own, you should factor the expense of property management as well.

Maintenance

There will be times when you will be required to maintain the property even if the rent deed says that the onus of maintenance lies on the tenant. No matter how new a property is, things are liable to breakdown and need to be replaced. Set aside a specific amount per month for repairs, maintenance, and replacements. After all, it is your property and you have a stake in its appreciation. For you, it is not a matter of utility but that of adding value to the house. While land values appreciate and regain their own levels one time or the other, house value keeps on depreciating. The amount of depreciation depends largely on how good or bad you have maintained it.

The monthly income from rentals may keep on changing with market trends but fluctuations in real estate prices do not affect them. For this reason, you can ensure positive cash flows by renting out your property. If you're looking to rent out your property, get in touch with us as we can provide you everything you need to successfully rent your property.


This article was written by Romalyn Casia for on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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