If you’re considering getting into real estate investing in Colorado, and becoming a landlord, there are a few questions that you should be asking. Many people start out by buying a property and living there, then rent it out down the line. Being a landlord is a lot of work and responsibility so these are the 4 questions to ask before you jump in.
Average house price
Start out with do you know the average price for houses in the area where you want to buy? Of course you probably want to do that anyway since you have to come up with a way to buy, but not knowing can mean you pay too much for a property. Also, ask yourself why you want to buy in the first place? American dream? Investment only? Or another reason?
Average rent for homes
Next, do you know the average rent for homes where you want to buy? This is really important for a few reasons. First, if you are planning on paying all or part of the mortgage with the rental income, you need to know that your expectations meet your needs. You should also know the average rents because that will tell you who will be able to rent your property. If you fix it up like the Taj Mahal but rents in the area will only support Section 8 housing, you will probably lose a lot of money and end up with tenants who may not keep your investment in the condition you expect.
Have a plan
Do you know how long you plan on living there, and how long you plan to keep the rental property? Will you live in the area after you make it a rental, or move away and manage it from a distance? All in all, you should have a concrete plan in place about how to live in, move out of, get it rented and manage the rental property. If you don’t, get one.
Will you hire propety management?
That last managing part leads to this question: will you hire a property manager and if so, have you figured in that cost? What about the cost of repairs, now and later when it’s a rental? Do you have the savings to manage? What about repairing it while it’s vacant and not generating any income?
Have you asked yourself any of these? If not, these 4 questions to ask will help you figure out the answers you need before you buy.
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