Being a landlord is indeed one of the best life goals, especially if you’ve experienced being a renter before. However, investing in real estate properties is more than a financial commitment. Here are some tips to help you know whether you are ready to be a landlord anytime.
Know Your Financial Capabilities
Nothing should be an impulse buy in the world of real estate business, or you will gain nothing at all. For newbie landlords like you, take a risk after answering these questions.
Estimate Your Return-Of-Investment (ROI)
Most financial experts comply with the "1-percent rule" in real estate investing, which implies that you should earn at least one percent return on your initial investment or the so-called ROI. To compute your first-year ROI, deduct your annual mortgage loan and interest (if you have a home loan) from the total projected property income (rent, tax savings, and equity), then finally divide it by your down payment. Your first-year ROI determines how much you may earn once you start your business.
Assess The Insurance Cost
Imagine the earthquake, fire, or burglary taking place on your property. You have not yet started the real deal, but a shocking mishap already happened. Thus, having a landlord insurance policy is as significant as paying your taxes. Decide what dwelling coverage your property needs the most and shop for rates as early as you can.
To wrap it up, being a landlord is not as easy as 1, 2, 3. You have to take responsibility for everything, from the initial investment to the water leaks in your property. Although it is draining, it is also rewarding when you finally get the fruit of your hard work. However, don't dare to go without insurance, hoping that your rental income can pay it off. Although landlord insurance is not mandatory, know how much it can save you tons of money from a horrible tenant's mess, accidents, and natural disasters.
At Mauser & Tobin Co., Inc., we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (516) 747-0171. Get your free quote today by CLICKING HERE.