Related Sponsors

What are the basic steps to owning rental property?

Home » Real Estate » Investing in Rental Property » What are the basic steps to owning rental property?

A lot goes in to finding and buying rental property, but it's good to know the big picture of the process before getting deeper into it. Knowing the full scale of the endeavor will help you know if investing in rental property the right decision for you.

The first step is to determine what type of rental property appeals to you. Do you want a single-family residence, amulti-family unit, a commercial property or a vacation home?

Next, narrow your search by focusing on available properties in a particular area.

Third, obtain comparable prices for similar properties in the area from a local real estate company.

The next step is to estimate possible rental income from a particular property, based on current rental prices for similar properties, found in the classified section of your local newspaper.

Next, determine possible cash flow (or losses) for the property by subtracting taxes, insurance, mortgage payment, maintenance, repairs and other expenses from the estimated rental income.

Sixth, consult a tax advisor about the tax consequences of investing in rental property. Then ask an attorney or real estate agent to review all contracts and agreements before submitting an offer.

Finally, make an offer based on comparable prices for similar properties in the area, subject to appraisal, loan approval and thorough inspection of the property.

Next Page: How long should I own rental property?

Related Investing in Rental Property Articles