Is it worth it to invest in a rental property? The answer is yes, but only if you’ve looked at the numbers first.
Looking to sell a home in Jupiter? Click here for a Home Price Evaluation
Looking to buy a home in Jupiter? Click here to perform a full home search
Just today, I took three calls about rental properties. Two of those calls were from individuals who aren’t making the money they need to cover rental costs, and the other call from someone who wanted to look into buying a rental property.
When it comes to rental properties, it’s all about the numbers. This house isn’t your primary residence, so it doesn’t necessarily matter what the house looks like. You need to be paying attention to the costs associated with this potential rental property.
When determining how much it will cost to run this property effectively and still make an income, you need to pay attention to additional costs besides the mortgage payment—like taxes, HOA fees, insurance, and other maintenance fees. You should also be including your vacancy rate when determining your bottom line, because your property probably won’t be rented every month out of the year.
Another thing to consider is if you’re going to run the property yourself or have a Realtor put it on the market to find renters for it. If you’re contracting a third party, you have to consider the cost of that as well.
Make sure you have money set aside in your account each month to cover the cost of unexpected repairs.
Are you budgeting money towards repairs? You need to make sure that you have a certain amount of money set aside in your account each month that will take care of any repairs if something breaks.
In the end, after you add everything up, you’ll be able to figure out your yearly net income. You take the total cost of your operating expenses, minus your gross income, and that will give you your net earnings for the year. In order for it to be worth the costs associated with it, your property should have a rental yield of 5% to 6% yearly.
If you have any questions about rental properties, how it works, and finding the correct numbers for a specific property, please give me a call. I can sit down with you and break everything down so it’s easy to understand and you can determine if this rental property is worth your time and money.
If you have any other questions or you’re looking to buy or sell a home in our area, please don’t hesitate to reach out. I’d be happy to help!
