If you own a rental property, and you’re watching over several tenants, then it’s safe to say that you have a significant source of income that offers you financial security. However, it’s always financially better to find ways to earn more—so if you’re already familiar with the ins and outs of owning rental homes, you could opt to get a second rental place!
Like all business endeavors, there are advantages and disadvantages to watching over rentals. It all comes down to your willingness to expand your income, take on more challenges, and start to browse realty listings in search of your next target rental property.
Keep reading below to find out the things you need to remember before setting your decision in stone to acquire a second rental property:
Research Real Estate Opportunities
An essential way to look for the next property listing you’re interested in buying and turning it into a rental home is to spend time researching the area you want. Besides focusing on the establishment, you have to be familiar with the zoning laws, market specifics, and latest trends regarding rentals and home sales.
It will also help to study nearby establishments, like universities, hospitals, shopping centers, and other recreational facilities, as these will show that the property is in a convenient location. Reaching out to a real estate agent may be necessary, too—especially if you don’t know the area enough to make a sound decision on your own.
Consider Your Tax Benefits
There are plenty of financial responsibilities involved in owning a rental home, let alone a second one. However, the advantages involved make it worthwhile because you can subtract interest rates, taxes, insurance, and more costs from your property’s overall income.
In addition, the losses you make can be deducted against your previous rental property and take out depreciation from your taxes as well. The deductions serve as your allowance for maintaining your properties. If you’re planning to stick to one property, you can sell your previous one and apply your proceeds to your current property without having to pay for capital gains taxes anymore.
Hire the Right Landlord
While turning a house for sale into a rental property provides you with passive income, you will still need to dedicate some of your efforts and time to ensure your business becomes successful. Not only do you have to learn the laws and policies regarding managing rental homes, but you have to guarantee your tenants are safe and comfortable throughout their occupancy.
Every time they encounter problems, you must always be available to address their concerns, no matter how big or how small they are. You need to go out of your way to collect their rent and initiate the repairs, which can often be taxing to do—unless you have a reliable landlord or property manager working for you.
Take Note of Your Expenses
Thanks to modern technology, you have all the resources and tools you need to make your property search more efficient and productive. You can utilize online mortgage calculators to help you assess how much your monthly finances will be when you decide to own two properties.
With a mortgage calculator, you can input the purchase price, down payment, taxes, mortgage loan interest rate, and insurance numbers. That way, you have a better idea of how much your expenses will add up and if having a new rental property can compensate for your costs.
Managing rental properties is demanding, but it’s often fulfilling if you’re receiving the income you desire. Before you begin purchasing a second rental property, it will be best to research real estate, consider your tax benefits, hire the right landlord, and take note of your expenses. Working with a realtor is also necessary because they can guarantee you’re on the right track to accomplishing your goals.
Are you looking for homes for sale in Kentucky to turn into rental properties? The Blake Hayden Group is a real estate firm dedicated to guiding home buyers, investors, landlords, and tenants in finding the best property for their needs. Get in touch with us today to talk to one of our realtors!