Buying A Tenanted Investment Property
The house-flipping phenomenon is not just a fad popularized by hit T.V. shows, it can be a lucrative stream of income if researched and done properly. Consider whether you have the time, money, and heart to do it though. Buying an investment property, one where you will have tenants, say a single family home or duplex,will require you to take into considerations the laws regarding landlords and tenants in Minnesota, as well as your handyman skills. Another consideration to think over is if you should buy a home that is deemed a “fixer-upper” or one that is relatively move in ready. The process of buying a tenanted investment property can be quite the endeavor, but as with most tasks, if done without haste and proper measures are taken; it can be a rewarding and smart investment.
When looking into flipping homes in Minnesota, ask yourself a few key questions first. To start, this investment needs to be considered like a second part-time job. Although hours may be flexible to your current occupation, do you have the time to invest in being a landlord? Your time will be spent after initial acquisition of the property by conducting any necessary repairs, updating and remodeling to bring renter appeal. This can be very time consuming as you search for the best deals on products and quality workmanship. After the home is ready to be moved into, you will need to devote your time and energy to finding the right tenant for your property. Steps need to be taken to ensure you have reliable renters. Look into ways to write an informative application and lease agreement.
The next step after you have determined you have the time,is to ensure you have the capital. How much should you put down on your investment property and how much can you afford each month for unforeseen maintenance issues? Investopedia.com recommendsthat investors in tenanted investment properties put at least 20 percent down on the home since mortgage insurance is unavailable in rented properties, and to allot monthly maintenance or operationcosts to be on average about 50 percent of the amount you charge for rent. Overall, expect a return on investment of 6 percent for the year.
Finally after careful thought has been given to the above, look to your own self and determine if you have the will to take this endeavor on. Flipping a houses in MN Minnesota can be rewarding but for the right person. If you have the passion to see this investment through till the end becoming a landlord may be right for you.
In regards to Minnesota law on leases and rental agreements, a landlord is only required by the state to not discriminate against tenants, other then in specials circumstances such as age limits in retirement properties, as well as requiring return of deposit within 3 weeks time of vacancy minus repair and damage costs. This protects the tenants from unfair practicesand protects the landlord shall any damage occur to the property while it has been occupied.
Overall, flipping homes into investment properties is a beneficial idea for those who can devote the time and energy. Do not expect to yield a large paycheck upon initial investment until more time has passed and techniques in being a landlord have been honed. It takes a lot to have a tenanted investment property but it also serves as a well-strategized task to earn extra income.