Risks That Come With Investing in Rental Properties
Investing in rental properties means that you’re taking a risk. No matter how good the market might be, you never know what’s going to happen. Here are some common risks that come with investing in rental properties that you’re going to want to avoid at all costs.
Risks That Come With Investing in Rental Properties: Unexpected Maintenance Issues
Maintenance is probably the most significant responsibility of the landlord (besides paying the property’s mortgage). Not only is taking care of a problem quickly the polite thing to do, but you are contractually obligated to do so – although the exact details will vary according to the wording of your tenants’ contract. It also is in your best interest to take care of problems as soon as possible, to keep them from worsening and getting more expensive.
The real problem comes when the repairs in question are much larger than you would have expected. Deep, internal problems in a property can be hugely expensive. Keep an eye out for such potential issues. Make sure to have the property inspected long before you rent it out, and have it checked regularly during the leasing.
Vacancies
Mathematically, it’s a simple dynamic: if you have positive cash flow, you’re much more likely to be making mortgage payments, even considering repairs. Thus, you need to keep your units filled. Do everything you can to find good, long-term tenants.
While it may be easier to quickly locate people who will sign up quickly, you don’t want people who will fail to make payments or who will destroy the property. Responsible renters who stay in one place for a long time are ideal because you also won’t need to worry about filling the unit for a long time. Long-term tenants can help you avoid trouble meeting mortgage payments for that reason.
Risks That Come With Investing in Rental Properties: Overwhelming Yourself
Renting out properties certainly is not easy. You will be dealing with large amounts of money and very valuable real estate. It can be stressful if you don’t receive the rent you need to make mortgage payments. You also will need to thoroughly understand every legal step that must be taken and every piece of paperwork that must be submitted.
It can be all too easy to become overwhelmed when doing it for the first time. Make sure to prepare as much as you can to know what to expect from investing. Every investment is going to have risks. As risky as renting out property can be, it’s a relatively much safer investment than other options (such as trading stocks).
Educate yourself as much as possible about the process, and then proceed as smartly as possible.
Did you enjoy reading this article? Here’s more to read: How to Avoid Real Estate Investing Regrets
Steelbridge Realty LLC is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.
