6 Tips to Consider When Buying a Rental Property

6 Tips to Consider When Buying a Rental Property

Investing in a rental property is a smart move. You would make a lot through passive income. When looking for a rental to buy, however, there is a lot to consider. We’ve discussed them below. Read ahead.


The neighborhood the property is in would influence how much rent you would be able to charge. The surrounding area would determine how vacant the rental would be. It would also influence the type of tenants you would have.

If the rental is in an area with a university, your tenants would most likely be college students or professors.

Be smart with the area you purchase in. If there are a lot of urbanization projects taking place, the value of buildings in the area would go up.


Investment properties aren’t cheap. Their property value depends on whether they would be used for commercial or domestic use.

When people invest in commercial real estate and get funded, they usually apply for special commercial mortgages. Their interest rates are more competitive compared to home loans for houses.

Down payment

For a bank to approve the mortgage, you will need to make at least 20% of the asking price. The good news is that lenders don’t care about where you get the down payment from. You could look into mortgage refinance options for any property you currently have. A new mortgage would buy out the old one, and you would be left with a considerable balance.

Property Tax

The location you’re purchasing in would affect the taxes you would have to pay. The local municipal council should run you through the area’s property tax rate. As you can imagine, how big the rental is, and whether it’s for commercial use or not would affect how much you’d have to pay.

Towns that aren’t doing the best financially charge the highest property tax rates.


Property taxes are only one of the expenses you would have to pay. The amount you would be spending to take care of the premises would be another. If it’s a big house or building, it would require regular maintenance work. Also, you would have to spend a lot when getting it ready for listing.

Don’t forget that the cost of property insurance has to be considered too.

If the property is not expensive, but you’re spending a lot taking care of it, you probably should stay away.


There may be specific landlord-rental laws in the area. It’s important that you understand the law and your tenants’ legal obligations.

When it comes to purchasing a rental property, there is a lot to consider. However, they aren’t too hard to keep in mind. Make sure the rental is in a tempting area. You would get more tenants and be able to charge higher rent too. Be sure to purchase a building that isn’t hard or expensive to take care of either. The asking price of the building may not be that bad, but you’re going to be spending a lot taking care of it.

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