Tips for Buying Your First Rental Property

Buying your first rental property can be a daunting task for many people, but it doesn't have to be. A rental property can give you a great source of income for the future. Houses or apartments for sale or rent in Sri Lanka are plenty, and there are always people looking for places to buy or rent.

Use the following tips as a guide on what you should know before buying your very first rental property. Keep in mind that there are different types of properties, so don't forget to research which type is best for you!

Determine your budget and how much "house" you can afford

What you buy will depend greatly on your budget, but there are also other factors that will play into your decision. You will need to consider the location of the property, how much it costs per month in regards to taxes and utilities etc., what amenities you would like (i.e.: pool, gym), as well as any uncertainty of future expenses such as renovations or major repairs down the line. Owning a rental property can be costly, especially if you have to do regular maintenance and repairs on the house.

Conduct a thorough analysis of the rental market in your area

It is always best to carry out a thorough research regarding the rental market in the area you are buying the property in. You will need to be aware of how much rent is generally charged for similar properties, as well as keeping an eye out for any new developments that may have a positive impact on prices.

You will also want to look into what amenities you can offer your tenants, i.e.: pool, gym etc., if they're available then it's likely that potential tenants would consider renting from you over other people who do not provide them with these options or services.

It really helps when looking at rental prices and assessing whether or not investment makes sense if there are comparable homes currently up for sale (i.e. houses very similar priced near yours). These comparable can help give you a ballpark figure of where home prices may be headed in the future.

You will want to make sure you take all of these things into account when looking for your first rental property because if you get them wrong, it could end up costing you a great deal more than expected and affect whether or not this is something that's going to remain profitable long-term.

A rental property is an investment where you rent out homes, condos and other properties as opposed to owning them for yourself. Rental properties are often looked at as great long-term investments because they can provide steady cash flow month after month which isn't something that most traditional stocks are able to do in comparison.

Research the neighbourhood, including schools and crime rates

The neighbourhood you buy in is very important, because if it is not a good one you won't be able to find many tenants, or you will have to charge very low rents in order to get them. It is also important that the neighbourhood has good schools, because if you are buying a rental property for your kids this will play heavily on whether they want to live there when they're older.

The crime rate is also something else that should be considered before purchasing any kind of real estate investment. If it is too high then tenants may not feel safe and might move out.

Decide whether or not to buy a fixer-upper or start with something new

In what condition do you want to buy your property; do you prefer something you can fix up or something that's already in good shape? If it’s a fixer-upper then you can add value to the property over time, but if it starts out nice and new then you will have less work to do.

Think about how much of your own personal time that you're willing to invest into the project before making this decision; is buying something newer or fixing up what is available more important? Also keep in mind whether or not your budget will allow for both options so nothing gets too expensive along with any taxes associated with either choice.

The most ideal situation would be starting with something brand new because everything was taken care of by the previous owner, but also having enough money left over to go back on and spruce things up a bit can also be a huge benefit.

Get pre-approval from a lender before starting any house hunt

If you don't have sufficient funds to buy the property, make sure that you have some good options for financing before you go out looking for your perfect rental property. Having these matters sorted out at the beginning can save a lot of time, money and heartache.

Renting out your property can be an excellent way to earn money passively. You don't have the stress of being a landlord, and you will get paid every month for someone else's use of your home. If this sounds like something that might work well with your lifestyle, take some time today to figure out how much space is available in your rental property or what type of financing options are available to help make it happen.