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Wednesday, November 18, 2015

Five Useful Tips for Buying a Rental Property

Done right, a rental property can be a great opportunity to generate income from a real estate investment – with monthly rental income in the short term and again if the property is sold.  However, there is also potential for big financial and legal pitfalls. 

Here are five useful tips for anyone considering investing in a rental property:

Run the numbers – all of the numbers.  It’s easy to compare the monthly mortgage expense and rental income.  But before you purchase a rental property, you need to account for time the home will be vacant between tenants, maintenance and repair, property taxes, insurance and other potential expenses related to the investment. 

Get to Know the Neighborhood: This is important for a few reasons. First, you want your rental property to be located in a neighborhood that will be appeal to renters at your price point.  You also need to be in a neighborhood that will accept the rental property and its tenants.  I advise doing research online (how many rental properties are nearby?) and also spending time talking to people who live or work in the area. 

Make Safety a Top Priority:  When touring potential rental properties – and particularly during the home inspection process – keep in mind that landlords are responsible for keeping the unit in safe and habitable condition.  Be prepared to walk away from any defective property that could increase the risk of fire hazards or other accidents, is in disrepair, has structural defects or lacks adequate ventilation, light or sanitary facilities.   Georgia law gives county and city governments the authority to order repairs, close or demolish structures which are unfit for human habitation and dangerous or detrimental to health and safety. 

Buy at the right price:  A good rental property investment goes beyond location, location, location.  You also need to buy your rental property at the right price.  Not only are you trying to create a margin between the expense of the purchase and the rental income – you also want to profit from your investment when you sell the home.

Check your lease language:  Template lease agreements are readily available online, however, it’s smart to consult with an experienced real estate attorney for help fully understanding the rights and responsibilities of the landlord as well as the protection provided and risks associated with the agreement.  The up-front investment you make tightening up lease language can save you time, money and frustration in the long run. 

If you are considering buying a rental property, contact me, Scott Mayfield, today at smayfield@smithwelchlaw.com  or call 770-358-3630.

 

Any representations regarding the law in this Blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


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