Investing your money can be a great way to make the most of money that would otherwise be sitting in a bank and collecting very little interest. Investing in property is one of the most common forms of investments but like all investments, there are risks. So if you’re looking at investing into a condo for rent, here are some tips to consider.
Know The Requirements
If this is your first time investing into any property, it’s good to know the requirements for spending your money on a condo to rent it out. If renting, you’ll need to be wary of the implications that come with purchasing one. There are tighter restrictions than if your purchased a detached home. For lenders who are going to give you the rest of the money to buy it, they’ll expect 20-25% of a down payment. So as an example, a $230,000 property will mean you need to have between $46,000 and $57,500 available. This is a lot of money for someone to spend so it’s important you know what’s available with that and whether its worry it to go ahead.
Pick The Right Location
Location is extremely important because the purpose of building condos in an area is usually due to the lack of space that’s available in the first place. It might be that maybe there’s not enough space to build detached houses and therefore condos are a suitable alternative to create more home in the space that’s available. So pay attention to the area and whether or not there’s a need for housing. Explore the rental field of the property market for that area in particular and if there’s a constant stream of tenants, then you are likely to never have to worry about that interim between a tenant leaving and having to find a new one. If you’re looking at areas, then check out this homepage for a starting point.
The Commitment
Purchasing a property or another one if you already have one comes with an additional amount of responsibility. You have the responsibility of looking after your tenants properly, paying the relevant fees and taxes and also making sure you make your mortgage payments on time. Look at your finances and check whether you’d be able to support the additional costs. To be sure enough, it’s always a good idea to look at your savings and to be comfortable with the amount you have that you would be able to cover those extra costs no matter how long it was needed.
In order to gain the benefits from investing in a condo, you want to own it for at least five years. Five years is a long time and a lot can happen in that time. Of course, no one can predict the future but it’s worth ensuring that you can make that financial and timely commitment in your current situation now.
How Much Can You Make?
This all ties into the area but it’s also to do with the size and condition of the condo that determines how much you can make from it. You should be checking what other condos in the building or the surrounding area are renting theirs for and ensuring that you have your own rental price verified by local property agents. Rent it out too high and you might struggle to find tenants, rent it out too low and you could be selling yourself short on how much money you could actually make.
There’s also the additional costs that will factor into having a rental property that might reflect how much you charge. Will you have a property agent to manage and oversee the rental process or will you do it all yourself? Are you furnishing the condo or are you expecting tenants to have their own furniture. All these extra costs need to be thought about instead of just ignored. Some buildings will also have a rental cap and so you want to ensure that the condo you purchase is one that you can actually rent out in the first place.
Investing into any type of property can be an exciting but challenging time, especially when turning it into a rental property. However as long as you do your research, you’ll certainly find the process to be a lot more easy going. So know your requirements and what’s expected in terms of finding a lender and any additional information that you’ll need when it comes to renting a condo. Look at the areas that are available to you and make sure you pick the right one. Be ready for the commitment of having a rental property and work out how much you can make to ensure you are making a worthy enough investment with your money. A condo may be a cheaper alternative to other properties but they can still have their disadvantages.
