Considering a Dutchess County Investment Property? Consider This.
There are more and more people that are interested in owning a Dutchess County investment property. Many popular television shows display the positives and negatives of owning investment real estate.
Currently, buying a Dutchess County investment property can be beneficial and even more cost-effective than in years past. Many people are able to get a mortgage loan with a low-interest rate. However, there are fewer properties to purchase.
Before making the leap into becoming a landlord, consider these ten problems landlords have with their Dutchess County investment properties.
Time and Effort
Many investors believe that all the work will be at the beginning right after the Dutchess County property has been purchased. Once a tenant moves in there will be little interaction with them or work needed on the property.
This is wildly untrue. There is a lot of time and effort that has to be put into every investment property.
An investor needs to know the laws around renting, maintaining the Dutchess County property, and being organized in bookkeeping. If anything is out of place, late, or broken the landlord is going to find themselves in hot water. Tenants will not be patient even if the landlord does not know what they are doing.
Long-Term Investments
Buying a Dutchess County rental property should not be a short-time investment. Planning for a long-term investment is best. Especially when buying the property with the help of a lender.
Most properties do not make the investor much money in the beginning. The landlord is learning how to maintain the property and starting a savings account to help cushion any emergencies that they may have.
The rent being paid to the landlord should cover the mortgage, insurance, and taxes. If the landlord is breaking even they are doing well. Once the property is paid off it can become a steady source of income. Or, at the very least, have appreciated enough to sell for an adequate amount.
Knowing the Laws
There are many laws with renting and most of them favor the renters. A landlord that does not follow these laws can find themselves in court paying much more than needed for a simple situation or problem.
One area many people get into trouble is not saving back the deposit for the renter and being unable to pay them out when they leave. This can cost the landlord up to double in fees to the tenants when taken to court.
Managing the Property
Many investors want to keep the most money as possible from their Dutchess County rental properties. As a result, they choose to go without a property manager. This can cause them to feel much more stressed than they need to be.
Paying about ten percent of the rental income is adequate to hire a property manager to handle all situations without the need for the investor to handle every little problem.
Purchasing an Investment Property
A Dutchess County investment property is meant to help the owner make money. Having a mortgage on the property will suck away most of the profits but help the owner have equity in a property down the road. It is best to pay cash for a property to avoid these high mortgage costs.
Always Save
Too many investors use all of the profits from their rental property to pay for additional properties. While it is a good investment to have multiple properties at once, there needs to be a financial cushion for each property. There has to be at least thirty percent of the income saved back for maintenance and emergencies. Otherwise, the landlord may have no way to fix a problem when it comes up.
The Importance of Leases
A lease is a way the landlord is able to make changes to the rent or even evict them. It is the agreement between the landlord and tenants on what must be paid and when. When leases are not renewed in a timely manner the landlord is setting themselves up for failure. They cannot change the rent to accommodate any financial obligations that might have changed in the last year.
Choosing a Neighborhood
The neighborhood is an important factor when buying a Dutchess County rental property. Most people want to invest in a neighborhood that has high appreciation but this typically works against investors who are choosing to rent their properties out. The property will need to appreciate greatly to help compete with other properties in the area.
Branch Out
Many investors are nervous about allowing programs like Section 8 to help renters pay for their rent. Section 8 actually brings in more consistent and caring renters. They take better care of their rental properties because they want to live in the area. They also could risk losing their assistance if they do not make payments on time. This can making them more secure renters.
Claiming a Rental on Taxes
One aspect that a Dutchess County rental property helps with is with taxes. There are many items that can be deducted from taxes when owning a rental property. Renovations, new purchases, and updates can all be claimed on taxes if they were done to the rental property throughout the year.