There are many obstacles and difficulties in getting a good rental real property
nowadays. And a customer should be informed about some of them, the
main at least.
Many investors toy with the notion of getting a real estate license.
This is probably not a good idea unless you actually want to become an
agent. While there's nothing wrong with enrolling in a course that will
teach you about real estate, the license itself can be a disadvantage.
This is because lenders typically won't make their best loans to real
estate agents. The difference dealing for example with studio
apartments for rent, may go up to 25%. They either know or suspect that
agents often make creative deals, so they tend to be concerned that
what's stated on the purchase agreement (which is the only document
that they have to go by) may not reflect the true deal. This is
particularly the case when a commission is going to one of the parties
of the transaction who also happens to be an agent.
Cleaning-security deposits can be a big factor in the purchase of
apartment buildings. At times the deposits may actually be larger than
the down payment. It's important, therefore, to know exactly how much
is involved, who has it, and who owes it before making the purchase.
It's important to remember that, when calculating profit or loss,
rental expenses must first be offset by rental income(in case if it's
not timeshare rentals). You can't simply take your total rental
property expenses as a deduction against your total taxable income from
all sources. For investment property, you must first subtract your
property expenses from your property income, and if that amounts to a
loss, the loss may then be deductible from your total taxable income.
Experienced real estate investors will often maintain a reserve fund
for cleanup, rent loss, and rent-up. Most landlords assume that their
property for rent will, on average, be vacant for two- to four weeks a
year as tenants come and go. Each time a tenant moves out, a clean-up
expense is incurred. And until a new tenant moves in, rent is lost.
Furthermore, rent-up expenses (such as advertising, credit reports and
other charges) to find the new tenant must also be paid.
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