Buying Property For Rental Income

Real estate is the new calling for an additional income and a very lucrative investment opportunity. Though very interesting, rub it the wrong way and you would find yourself in the idle of a very murky legal battle, that finds no end. Here are a few pointers to help you make the right investment.

What is meant by owning a property for rental income?

The best example would be the Palace Grounds in Bangalore; this is a huge acre of land owned by the Mysore maharaja (king). Now, the king leases or rents out the pieces of land to the influential who’s who of the country who use their leased/rented property as wedding venues, training academies, exhibition spaces etc. While the beginning is a tough task, once the land picks up a popularity among potential customers, the business/ renting out comes in huge numbers and results in turnovers that are bigger than the initial investment. Yet there are a few things to bear in your mind before buying a property for rental income.

Things to bear in your mind before buying a property

Following are some important points to consider before buying a property for renting

Expenses

• Like all taxes, the rental property would also have tax to be met like rental property taxes, Income Tax for rental income, etc. Consult a good tax consultant to be able to pay your taxes without any mistakes.

• Expenses for maintain your rental property

• Expenses include recurring expenses such as annual property taxes, insurance, routine maintenance and repair items, and the cost of any property management services.

• Plumbing, fencing and other upkeep expenses will be taken care of by you before renting.

Legal

• Makes sure that the property you are buying is duly registered.

• The property will have to be transferred to your name and permanent address.

• Register with a property management firm to be able to propel your property further and keep in tab with changing legal structures for renting like, taxes, khatas etc.

• You will have to do a lot of homework and research before buying the property, based on what kind of income you require.

• Insure your property. You never know what natural/ artificial calamity could strike your property and drown you into a debt.

Research

• The proximity of the property rented, to basic facilities like, schools, colleges and hospitals If the property is being rented for living purposes.

• Proximity to airport, railway station and tech parks would be important while renting out a property for commercial purposes.

• Have your eyes peeled out for any new developments in form of malls, parks, clubs, and restaurants around the property. This gives a better rent-able appeal to your property.

• Understand the culture of your neighborhood.

• Some neighborhoods do not like noisy surroundings. You cannot throw open a property for commercial rent in such cases.

Risk factors

• Lack of publicity could result in your property not being rented for a long time.

• Make sure that the tenants you look for are trust worthy.

• Damages done by tenants would be your responsibility if not taken care of in the initial documents.

Getting a good property to rent out might seem like a herculean task. For a fact, it is. With proper research, choosing the right place that facilitates the kind of turnover in your mind and diplomatic and smart delegation of the procedures of renting, buying a property for rental income would be the right kind of investment you are looking for.