Passive income is a beautiful thing. You get money over and over for having made a wise investment at some point in the past. One idea that has been popular with both myself and many of my students is purchasing a nice house and then renting it out. In fact, this method is what kept me in the black during the recent financial crisis.
But, as you can probably imagine, not every house makes a suitable rental. Whether or not your house will be attractive to potential tenants depends on the location, porximity to stores and schools, the price, how many other homes are avaialible, if the area is prone to flooding or other natural disasters, the price and availability of utilities, and a host of other factors (some of which may be out of your control).
An investment website posted a great checklist of things to consider before investing in a rental property, and you should absolutely check it out. I especially liked the following comment about setting a rental price:
“Rent will be the bread and butter for your rental property, so you need to know what the average rent in the area is. If charging the average rent is not going to be enough to cover your mortgage payment, taxes and other expenses, then you have to keep looking.”
Rental properties are a great investment if you do your homework beforehand.