Costs to Consider when Purchasing Rental Investment Property

Costs to Consider when Purchasing Rental Investment Property

The process of searching for investment rental property can be exciting; however, before you get too excited it is important to run some preliminary numbers to make sure you know exactly what you are facing to ensure a successful investment.

First, you need to carefully examine potential rental income. If the property has already served as a rental property, you need to take the time to find out how much the property has rented for in the past and then do some research to determine whether that amount is on target or not. In some cases, properties may have rented for lower than they should have while in other cases a property may be over-rented. Look at comparables in the area to make sure you know whether the property in question is on target; otherwise you may find that the amount you think you will be receiving in rental income is unrealistic.

Mortgage interest is another area that should be considered carefully. Make sure you know and understand prevailing interest rates as well as the details of your specific loan because mortgage interest is the biggest cost you will face when purchasing investment property. First, understand that homes and duplexes tend to have loan structures that are similar to any mortgage loan. With a larger property; however, such as a triplex; rates tend to be higher. If you are looking at commercial property with even more units; the matter of terms and rates is completely different. Typically, the more money you are able to put down on the purchase of the property, the less interest you will have to pay.

Taxes are another issue. Many people use the taxes from the year in which the property was purchased and assume they can use these figures to estimate expenses. This is not always the cases because taxes do not remain the same; they typically change every year. Usually, taxes go up after a property is purchased. This is especially true if the property was previously owner occupied. So, it is typically a good idea to just assume that the taxes will go up on the property after you purchase it.

One area which many people fail to take into consideration is the cost of the property being vacant. While you would certainly hope that your property would remain rented all the time, this simply is not realistic. There will probably be times when your property will be vacant. Generally, you should assume that your property will have an average 10% vacancy rate.

The cost of tenant turnover should also be taken into consideration. This is often a big surprise to many landlords who assume they will rent out their properties and their tenants will remain in the property for some time. Even more of a surprise is how much it costs to prepare the property to rent out again. Just a few of the costs include not only advertising for a new renter but also repainting, cleaning, etc. If damage was done to the property, the total cost of repair may not be fully covered by the security deposit you charged.

Of course, the cost of insurance should also be taken into consideration. Keep in mind that the insurance for investment properties is usually higher than an owner occupied property. Make sure you obtain a quote rather than just using the insurance cost for your own home as an estimating guide. In addition, make sure you take into consideration not only property insurance but also liability insurance as well.

Utility costs are another area that are frequently under-estimated. If the property has already served as a rental property make sure you find out exactly what the owner pays for and what the renters pay for. You should also make sure to find out whether you will be responsible for other costs such as trash collection.

Finally, take into consideration the costs of property management if you will not be managing the property yourself.

STOP HOME REPOSSESSIONS!

STOP HOUSE REPOSSESSIONS
2nd mortgage applications are being turned down in record numbers but the amount of people who apply for mortgages
is increasing even those with small arrears are finding it difficult to avoid repossession. This is due mainly
to the huge amount of bad credit mortgages given in the last few years to people with bad debt ccjs who wanted
to consolidate debts into one loan in a consolidation loan clearing debts from credit card balances. These people desperately
need debt management plans that offer an easy to impliment debt solution.

Help with debts and help with repossessions from the government have been talked about but have still not been implemented
leaving people struggling to find even affordable repossession advice.

So how does one get repossessions stopped ?

well in the first instance CONTACT YOUR CREDITORS its no use hiding your head under the blanket

GET REPOSSESSION ADVICE NOW whatever the cost it must be better than losing you home

STOP REPOSSESSIONS

The number of homes in the UK repossessed by lenders rose last year by 54% to 40,000, according to the Council of Mortgage Lenders (CML).

Despite the recession, the CML said this was fewer than it had originally predicted, but it expects repossessions this year will reach about 75,000. IN THE UK ALONE!

It said lenders were making "strenuous efforts" to ensure repossessions were a last resort.

But it also reported a sharp rise in homeowners handing back their keys.

"We strongly urge borrowers to contact their lender and work with them before taking this step, as there may be other solutions," said the CML's director general Michael Coogan.

"Borrowers are still liable for their debt, even if they leave the property, so working through their problems is much more likely to be in their best interests," he added.

2nd mortgage applications are being turned down in record numbers but the amount of people who apply for mortgages
is increasing even those with small arrears are finding it difficult to avoid repossession. This is due mainly
to the huge amount of bad credit mortgages given in the last few years to people with bad debt ccjs who wanted
to consolidate debts into one loan in a consolidation loan clearing debts from credit card balances. These people desperately
need debt management plans that offer an easy to impliment debt solution.

Help with debts and help with repossessions from the government have been talked about but have still not been implemented
leaving people struggling to find even affordable repossession advice.

So how does one get repossessions stopped ?

well in the first instance CONTACT YOUR CREDITORS its no use hiding your head under the blanket

GET REPOSSESSION ADVICE NOW ehatever the cost it must be better than losing you home

Arrears

The level of arrears among mortgage borrowers also became worse as the recession gripped the economy.

We're putting in place this comprehensive package of measures to try and reduce the risk of repossession as much as we can

Iain Wright, Housing Minister


Dealing with the threat of repossession in England and Wales
Dealing with the threat of repossession in Scotland

By the end of last year, 182,600 mortgages had arrears worth 2.5% or more of the outstanding balance owed to the lender.

That amounted to 1.57% of all mortgages currently in existence.

That was up sharply from the 1.08% of mortgages with this level of arrears at the end of 2007, and the 1.29% of mortgages in this position at the end of September of 2008.

Housing Minister Iain Wright said the government had announced several initiatives designed to provide tailored support to people who risked losing their homes.

"For every repossession, it's a tragedy for somebody - for a family or household - so we have to continue to be focused and determined to minimise as much as possible the risk of repossession," he said.

"That's why we're putting in place this comprehensive package of measures to try and reduce the risk of repossession as much as we can."

But shadow housing minister Grant Shapps said the government was partly to blame.