If you were interested in investing in homes, you will need to perform a number of steps. For starters, be sure to make some phone calls to confirm the cost of recent utilities such as electrical, gas, water, and sewer. When you turn around to rent your house out, in addition to recouping the actual mortgage payment, if you plan on covering any utilities as a part of the lease agreement, you want to make sure that you also cover those costs along with the rent payment. For example, if the mortgage payment is $600 a month, and you plan on covering electrical and gas, which on average run $125 a month, you would need to ask $725 per month from the tenant for rent to cover those costs.
Although the majority of people are honest, it is critical to run a background credit check on all tenants as well as collect a security deposit upfront in the amount to cover one month. This ensures you as the owner, if the tenant leaves for any reason without paying, you are covered for one month. In addition, if the tenant has pets such as dogs that might cause damage to the interior of the home or tear up the yard, you should also consider collecting a pet deposit. Again, if damage is done to the carpet, this will provide you the money needed to replace it.
Another extremely important step before making your investment is to have a full inspection of the house done by a qualified inspector. A house may look perfectly fine but without having it properly inspected, you could easily miss a foundational problem, or a plumbing leak, or damage to the roof. These items could end up creating your worst nightmare and costing you thousands and thousands of dollars. The minimal cost to have the inspection done is the best money you will ever spend.
If you are considering an investment based on current tax laws, you should rethink your strategy. Tax laws are constantly changing. Based on what the current law is, may, or may not make a property a good investment. To better your chances of creating a positive cash flow from your investment, either contact a tax advisor or conduct thorough research first. It is important to understand that if a seller’s coverage is based on replacement value that is lower than the current value, you could end up paying a higher price due to insurance costs rising. Investment is a powerful tool and one that can provide you with years of good income and equity. Just be sure to do your homework first and know all your options and risks.