Q: What's up Al? I need some advice... I'm livin here at school and I just recently rented a house... my old land lord currently wants to sell my old house for about 78k. I was thinking if I bought the house then rented it out it would be a way to get a income... what do u think?
A: Owning rental property is a good and profitable idea. Here a few things to consider:
A: Owning rental property is a good and profitable idea. Here a few things to consider:
1. Make sure you do a thorough title search or get a title search company to do it. If there is a lien on the house when you buy it then you will end up paying for the lien or even worse, you could lose the house and any money you've put into it. There's NOTHING you can do about that. Ouch. Liens take precedence over anything else.
2. If you end up buying the house make sure you get a FIXED APR, not an adjustable one.
3. How long can you afford to pay the mortgage yourself if you have trouble finding a tenant?I've seen a few people get jammed up dealing with this. It took longer to rent their property than they thought it would. They messed up their credit and almost lost the house because in addition to their normal mortgage, they had to pay the mortgage on the rental property.
Knowing that shouldn't scare you, just prepare you.
2. If you end up buying the house make sure you get a FIXED APR, not an adjustable one.
3. How long can you afford to pay the mortgage yourself if you have trouble finding a tenant?I've seen a few people get jammed up dealing with this. It took longer to rent their property than they thought it would. They messed up their credit and almost lost the house because in addition to their normal mortgage, they had to pay the mortgage on the rental property.
Knowing that shouldn't scare you, just prepare you.
4. If your tenant(s) call you about repairs will you be able to make them or do you have the money to pay someone to do it?
5. Be careful with shady individuals and certain types of college students. They've been known to tear a place up! Get some references before you rent to them and do a credit check.
5. Be careful with shady individuals and certain types of college students. They've been known to tear a place up! Get some references before you rent to them and do a credit check.
Reflect on those five things for awhile because a rental property could give you plenty of headaches and financial worries. But who knows? If you do this right you could graduate debt free or close to it, especially if you end up investing in more than one property. Let me know if you have any more questions.
