Dos and Don’ts of Buying a Second Rental Property
What to Think About Before You Buy
There are several financial benefits to investing in two or more rental properties, but there are also downsides to consider before venturing down the path of being a landlord to multiple tenants. One of the best things a landlord before purchasing a second rental property is to weigh all the options and make an informed decision. To help, we have put together a list of “Dos and Don’ts” when it comes to buying a second rental home.
Do: Think about the tax advantages
More rental property equals the ability to increase write-offs and the potential to offset gains. Interest, taxes, insurance, and other expenses against the income property are just a few of the benefits of owning multiple rental properties. Want to learn more about tax deductions, take a look at:
- Tax Deduction When Owning Two or More Rental Properties
- Top 5 Tax Deductions for Landlords
- 2018 Tax Reform (The Tax Cuts and Jobs Act)
- Property Management and Accounting
Don’t: Forget you will be a landlord to multiple tenants
Being a landlord to multiple tenants and rental properties means that you will have to dedicate much of your time to the business. From keeping up with rental and tenant laws to maintaining a safe property for your renters, you will need to regulate your time and energy. Not sure you want to dedicate yourself to that process and want to look into a property management company? Take a look at
Do: Look into the numbers
When looking to diversify your rental portfolio, you need to keep in mind the “numbers’ behind the investment. Questions such as:
- What money would you put towards the down payment?
- How much would you pay in taxes?
- What is the amount each month for insurance?
- Would you need to have a mortgage loan?
Once you have answered these questions, think about what it will cost to maintain the property and budget accordingly for repairs and maintenance. Want to learn more about the numbers? Take a look at the following blogs:
- “Equity Growth and Appreciation when Dealing with a Rental Property”
- “Property Management and Accounting”
- “What You Need to Know About Insurance for Your Rental Property”
Don’t: Forget to plan
By planning, we mean taking the time to do your real estate homework when it comes to finding a property that fits your location and vision. Not only will you want a property that is attractive to renters, but you will also want to invest in a rental home that will be low risk with high yields. Keep in mind locations that have good schools, transportation, shopping, restaurants, and easy accessibility to local attractions and parks. Know your targeted market by purchasing a rental property that checks off all the boxes. For more information on where to buy in the Raleigh area, take a look at:
Do: Look into a Property Management Company
At Oak City Properties, we have been taking care of rental properties for years! Our full-service property management company will help you find and buy new rental properties to grow and diversify your portfolio. We will also market the property, locate prospective tenants, and show the home to qualified applicants. Once a tenant is placed in your rental property, we will: collect rent payments, assess and collect late payment fees, provide 24/7 maintenance, help with accounting/tax services, and deal with any court appearances in the event of an eviction.
Want to read more about property management services? Here are a few blogs that may interest you: