If you are looking for a way to make additional income and also gain assets, purchasing rental property can be an ideal way to make that happen. Just keep in mind that property management does take some work and is an investment of your time, as well. It’s not as simple as just getting a mortgage and finding tenants, there are some other important steps involved and issues that you may face.

Before you even begin to look at rental property, consider exactly what you can afford. Overlooking this step could put you in a potential financial bind. If the rent received does not cover the mortgage payment, then you may fall short each month in your budget. Research your local rental market carefully so that you know what to expect for the “going rates.” You can find information about this in the classified section of your local newspaper or the local landlord’s association.

There are also other expenses that you need to prepare yourself for before you commit to being a landlord. You need to not only get a rental income that covers the mortgage, but also the insurance, taxes and maintenance costs that are associated with owning rental property. Consider not only the property taxes, but also the impact that the income will have on your own personal income taxes.

Think about what type of property will suit you best. There are single family homes, duplexes and multi-unit buildings available for Michigan property management. Each type of building will attract different types of renters. Knowing which type best suits you ahead of time can save you some headaches.

As an example, purchasing rental property that is located in a college or university neighborhood will attract students as tenants. This may mean that you experience a high level of tenant turnover, which could leave you with problems trying to collect rents and even a higher risk of property damage.

As a Michigan property management landlord, you also will have certain responsibilities. There are state regulations that dictate certain policies you must follow regarding fair housing, maintenance, amenities, etc. Familiarize yourself with these guidelines ahead of time to avoid hassles later on.

Lastly, be sure that you are adequately insured. You will not only need to have coverage on the property, but also adequate liability coverage. One serious claim could be enough to completely ruin you financially, if you are not properly covered. The tenant may be responsible for insuring their personal belongings, but, as a landlord, you are the one responsible for insuring the property and providing liability insurance, not the tenant.

Owning rental property can be an excellent investment, if you do it right. Learn the important steps and be aware of potential pitfalls well before you need this information. Seek help from experienced professionals, including real estate agents, attorneys or insurance agents. This could mean the difference between failure and success!