Are you thinking about purchasing a home or condo, then renting it to tenants? If so, you should be sure you can get at least 8 percent of the home’s purchase price a year in rental income. If you can get 10 percent, you have a better chance of coming out ahead. That is, if you pay $200,000 to buy the house, you should be able to rely upon at least $16,000 a year, or $1,333 a month, as rental income. If you can get $20,000 a year ($1,667 a month), your chances of earning a profit are greater.
Look for a rental house or condo close to where you live so you can handle the details yourself rather than pay a fee to a property manager. Be sure to make an effort to find good tenants who’ll take care of the property. Before you rent to anyone, run credit checks and get references from former landlords. If you’re renting to students or young people just beginning their careers, ask the parents to co-sign leases.
