What should I know if I’m buying my first rental property?

On Behalf of | Feb 25, 2020 | Firm News |

Sure investment bets are a bit like unicorns. They don’t exist. Any investment carries some risk, however negligible. But the good news is that there are ways that you can lower your risk of losing money on your investment in rental properties. Read on for some suggestions on what to do before making the leap into landlord territory.

Secure your funding

Typically, you will need 20% of the purchase price as your down payment. With special deals like short sales and other transactions, the terms might differ. But be prepared to have your funding source arranged and at the ready.

Landlords, will you be hands-on or use a property management company?

Landlords can save themselves money if they have the skills to make repairs to their own properties. If you can change out a broken toilet, fix a leaking faucet and repair holes in the drywall, you are already ahead of the game.

But if you can’t tell a pipewrench from a Phillip’s screwdriver, all is not lost. Many landlords hire property management companies to do everything from making repairs to screening tenants to collecting rent every month.

If the property sits empty for months, can you cover the mortgage?

Your property might be located in an area of Hollywood where people are lining up to rent. But real estate markets can shift quickly and leave you without renters. The mortgage payments will still come due every month, though. Make sure that you have sufficient income to cover the note every month.

Protect yourself legally

There are many ways in which landlords can run afoul of Florida real estate laws or federal anti-discrimination statutes. The language that you use in your rental contracts could also be too vague and leave you open to lawsuits. Because it can be difficult to know whether a contract is indeed legally enforceable and protect your business interests, it is always prudent to have your Florida real estate attorney generate your legal documents. At the least, they should review any documents that you and your tenants jointly sign.

Being a landlord can be a lucrative business endeavor as long as you get all of your legal ducks in line before purchasing the rental property.