Factors to Consider
Self-Manage or Hire A Professional Management Company?
If you are considering taking on management personally speak with other investors that have already made this choice, managing a property can be a lot of physical and mental labor and is very time consuming. A professional management company will save you money. By budgeting for large expenses, having preferred pricing with vendors, media advertisers and legal representation.
Considerations involved with the purchase of your investment property
Condition of The Property
A thorough inspection by a qualified professional is a major 1st step. How many of the repairs you can do on your own, and how many would require outside contractors. Get estimates for any major jobs that you would have to pay to have done.
Fix all serious issues before anyone takes occupancy is priority. This vacant period of time means time without income. How long the make ready to rent process will take. Include in your cost figures for purchase. You may even find you can negotiate a major concession or price reduction with this knowledge.
Everything is relative. Depends on the price, cost of restoration against sale price, lost time of income to expected income and for what period.
We specialize in one family units. From what we have learned it is the neighborhood that determine what the going rate of rent is normally for that area. Your consideration should revolve around accessibility, whether its social, has schools or work. Ideally a good combination will get the property in demand for higher rent and occupied in quicker time.
Insurance companies employ actuaries who through statistical techniques and mathematical skills assess the probability of an event and its financial consequences. These factors contribute to the cost you pay for insurance. Insurance of a rent investment property should not cover contents. What you would be purchasing is a Landlords policy that includes liability. You determine if the cost of your insurance for the area you are looking at fits into your projected expenses.
Property tax is gathered by statistics, using sale price of existing homes less land value, area utilities, built or vacant land. There are many factors that may be involved to arrive at the yearly charged rate of your property tax.
Self-Manage or Hire A Professional Management Company and Condition of The Property. Both are equated by your time if you do it yourself or hire out. You need no license to manage your own property. You would need an occupational license to claim a tax deduction on the work you do for yourself on your investment. The material used would be deductible. Research permits and licenses needed as you may not be qualified to do them.
Neighborhood, Insurance Costs and Property Tax are related in cost to the area you wish the property to be in. Each one of these expenses will be related in some way to the demand relevance of that area. The benefit side of the cost for repair and maintenance, purchasing costs, tax, insurance and professional management are tax deductible. A tax professional could guide you in the tax advantages of this type of entrepreneurship.