Investing in real estate has many upsides, but if you’re not careful, it can have just as many downsides to navigate through. Your goal is to gain a profit from your investment, but the only way to do that is by protecting your home investment. Here are four ways to do just that and to ensure you’ll get a decent ROI.
Purchase the Right Insurance
If you plan to rent out your property, you will likely need additional insurance over the standard homeowner insurance policy. In the event of a partial property loss, liability lawsuit, or even total property loss, if you don’t have the right insurance in place, you could have your entire finances wiped out. It’s best to talk to a mortgage broker about the options available to you and whether or not you need any additional coverage such as flood, sewer back up, or loss of income insurance.
Hire a Property Manager
It’s not easy running and maintaining an investment property. But it is easy to fall behind on your bills, mortgage payments, rent collections, and maintenance requirements. To help keep yourself on track, consider hiring a property manager who will take over the marketing of your rental, collecting rent, preparing tax returns, handling tenant correspondence, and repairing and maintaining the building. A PM can be a huge asset to your business – they’ll save you time, ensure you’re operating efficiently and legally, and even help your properties increase in value.
Have an Adequate Budget for Repairs and Maintenance
One way you can really damage your bottom line and profits is by having a misappropriated budget that does not provide enough funds towards your annual repair and maintenance fees. You can draft a performance to estimate costs for your future roof repair and other necessary improvements, but you also need to be prepared for unexpected expenses that could arise like a broken furnace or flooded basement. So, what is the right amount to put aside? Experts recommend that you should have at least $1 per square foot per year budgeted to maintenance and repair costs. If your property is older or run down, you might want to allocate even more than that until the heavy-hitter items are replaced.
Have Legal Representation
The cost of hiring an attorney is a small price to pay compared to losing your investment over a tenant issue, tax implication, or disagreement with a contractor. A lawyer can do a number of things for you, including checking that there are no claims against the property before you purchase, reviewing the lease terms to ensure you’re adequately protected, drafting contracts with contractors to outline who is responsible if issues occur or the work is subpar, and standing up for you in court if a suit arises. A lawyer can also help find ways to avoid risk by navigating through all the tax laws and local by-laws.
When you need a real estate lawyer on your side to protect your home investments, reach out to us at Accord Law. Our team has the extensive experience and knowledge needed to ensure that your rights and assets are safeguarded. Contact us today to learn more about our services.