For any professional, passive income is a great means of earning as it generates money steadily with little effort on your end. There is a wide range of business ventures that will help you achieve this, but one of the most well-known methods is by renting out a secondary property.
Rental properties potentially earn well, but it still takes commitment and patience to gain stability in the undertaking. Prior preparations and some regular maintenance are required to keep it smoothly running, too.
Before pursuing the homestay route for the prospect of making passive income, there are some questions you must ask yourself. Use this as a guide to know if this is the right decision for you.
Questions to Ask Before Buying a Rental Property
Check against your current financial situation and where you are in your life and career to see if renting out a property is feasible for you.
- Can you finance your rental property?
First things first: are you financially capable of adding some debt into your monthly budget in order to purchase a property? If taking in a rental property endangers your capability to make your payments on time, then it is clear that now is not the best time to do this. There will be a better opportunity later.
However, if you have computed the expenses you will incur for acquiring a property and observed that you can take on new debt, then do not write this one off just yet. Consult with various lenders to see which mortgage works best for you in your current financial status.
You should also check the prices of properties in the location you are planning to purchase a property in. Since demand for single-family homes is high right now, you may have to take more time to browse through properties to find one that fits within your budget.
- Can you financially handle maintenance and repairs?
When you have bought a property or if you already previously own one, there are still some expenses that you will incur. These costs include any home repairs and renovations you may have to make prior to renting it out. While these are usually not as expensive as the property acquisition, personal cash loans will help you finance these small home improvements.
Owning another home makes you responsible for regular maintenance, too. These include checking for leaks, clearing out vents, and general house cleaning, among other things. You also have to allot money into hiring experts to perform some of these checks regularly.
- Are you willing to take time to market to tenants?
Now that you have covered the financial aspect of owning a rental property, you should assess your willingness to take some time to market your property on websites to make sure tenants pay attention to it and book it.
Marketing to tenants is not a simple matter of posting a property listing on websites such as Airbnb or Vrbo. When your property is new, you also need to take good photos of your home to make it more inviting. Reviews and previous tenants cannot put in a good word for you just yet when you are starting out.
You also will need to take to your social media accounts to make more people aware of your property. Recommendations to personal friends help, too. Knowing these, consider how much time and energy you are willing to spend in marketing.
- Do you have time to manage tenants?
Willingness to spread the word about your rental property is one thing. Capably managing existing tenants and responding to their needs is another matter entirely. However, both require some work on your part.
While this does not mean you must be present 24/7 to just pay attention to what your tenants need, managing a property does mean that you are able to respond should they have any concerns or questions. It also means providing helpful information about the local neighborhood should they need it.
When you are unavailable, do you have someone else you can entrust them to? Are they able to direct their concerns to a reliable point person? Managing a rental property also takes quite a bit of patience, especially at the very beginning.
As guests become more familiar with your property, you will gain more reviews and have new guests find you easier on listing websites. Still, it takes some time to reach the point in which your rental property truly feels like a source of passive income. Remember that if you are willing to try, the rewards can be great.
