Retirement planning experts say that one of the best ways to plan for retirement is by having passive income streams. This includes investments like certain bank accounts, stocks with dividend options, and owning a rental property. The latter can seem like a scary proposition to start, but once you’re up and running, a well-researched rental property can provide passive income well into your retirement years.
Holliswood Center for Rehabilitation and Nursing has a look at five tips on buying a rental property that will work for you.
- Have Startup Costs Set Aside
You’ll want to be as debt-free as you can before you enter this venture. You’ll also need some money set aside for closing costs, making any changes you are looking to make to the property before you begin to rent, and then either searching for tenants yourself or pay a property manager to do so. You will also need to have money for repairs once you have tenants.
- Find the Best Location
You’ve heard it before: location, location, location! Consider the type of tenant you’re looking to attract. Rent in a popular vacation area if you’re looking for short-term vacation-style rentals. If you’re near a college campus, you may be able to offer student housing. If you’re looking for something stable and not as impacted by economic swings, look in blue-collar neighborhoods that are close to hospitals and good schools. These areas seem to less affected by a down economy.
- Get the Right Financing
Since this is an investment property, be prepared to put more money down and pay a higher interest rate on your loan than you did for your primary residence.
- Get Landlord Insurance
In addition to homeowner’s insurance, you’ll want to get landlord insurance. This will protect you against property damage incurred by tenants and other liabilities that could affect your portfolio.
- Don’t Settle for Any Tenant
Once you’ve got the hard parts out of the way and you’ve listed your rental property, don’t take the first offer that comes—studies show that new landlords accept the first application they receive. Be sure to do your research on any potential tenant to see if they will be a good fit. Not only do you want them to be financially secure, but you also don’t want your tenants to give you too many headaches. After all, this is supposed to be passive income!
To learn more about Holliswood Center for Rehabilitation and Nursing and all of the services they offer, visit http://holliswood-center.facilities.centershealthcare.org/.
