If you are looking for a way to make some extra income, you may consider buying an investment property. While there may be many potential benefits of owning a rental property, there are also several possible challenges. Before you purchase a rental property in North Carolina, it is essential to understand the relevant practical and financial aspects of being a landlord.
According to CBS News, there are several essential considerations to ponder before becoming a landlord. Managing a rental property may affect your lifestyle and schedule in numerous ways. For example, you may have a dedicate a significant portion of your free time to maintaining your property, interacting with your tenants, and finding new renters. Collecting rent may require you to set up accounts with online payment providers or make trips to your bank to deposit checks. You may also have to understand and follow specific state and federal guidelines for landlords.
Before you invest a large portion of your financial resources in a rental property, it is a good idea to figure out your budget. Many financial experts recommend following the "one percent rule." This rule may help you determine if a rental property will be a good financial investment. Ideally, you should charge rent that is equal to at least 1% of the property's purchase price (plus any required repairs). If the market in your area does not support rental rates at this level, you may want to find a different location. Property taxes may also affect your financial calculations. You may have to pay a higher rate on your investment property than you do on your primary residence.
This information about rental properties is intended for educational purposes and should not be interpreted as legal advice.