How To Make Money Renting Out Houses

There are several ways to make money out of the real estate market, but if you want to build up a property portfolio then one of the ways you can do it is by buying and doing up houses that you can rent out to other people.
Getting started is the hardest part, but once you have some experience you can use it to advance and get more properties under your belt. The idea behind this method of making money is quite simple, but it still helps to go through it step by step to make sure you can really make a profit from it.
Research is the name of the game here. What you need to do is buy a property in an area where you have a pretty good chance of being able to rent it out again very quickly. You might need to spruce it up a bit but unless you are up for a big building job you are better off buying somewhere that doesn’t need a lot of work doing to it, as you’ll be able to rent it out far more quickly.
You also need to find out what the average rents are in the place where you are thinking of buying. You need to be sure that they are higher than the amount you would pay for a mortgage each month otherwise you won’t be making a profit.
Make sure you have a proper rental agreement drawn up by a professional so that both parties understand the situation exactly, and the amount of rent due to be paid and when is clearly indicated.
If you can rent out the property for a few years while it (hopefully) increases in value, you may then be able to refinance it and buy a second property to repeat the process. There is no guarantee of course that the valuation of your properties will continue to climb and we all know that they can drop on occasion, but provided you don’t overextend yourself you will hopefully be able to ride out any changes in property prices.
This does illustrate the need to make sure there is a good cushion between the amount you are paying for your mortgage and the amount you are collecting in rent each month though. The more cash flow you have, the better.
It’s also wise to make sure your properties are near to where you live, because if your tenants encounter problems that you need to sort out, you will need to be on hand to solve them – or at least get a professional in to do it for you. You might want to invest in the services of a management company if you have several properties that you want to rent out to other people; these companies take over the day to day running of them for you for a small fee, and it can save you a lot of headaches, especially if you are looking for other properties to buy and rent out and you haven’t got the time to do it.
In short renting out houses can be a good way to build up a monthly income. What’s more, if the value of the properties goes up as you pay your mortgage each month, you might be able to sell them for a decent profit in a few years from now.
It is the number of options you have in this situation that makes buying to rent so appealing. You just need to make sure you don’t overextend yourself and build up gradually if you want to have a whole portfolio of properties being rented by other people.
If you are ready to start looking into this further, there is no time like the present. But make sure you use the form below to leave us a comment first! Good luck.