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There are several benefits to investing in a rental property, as long as you are in the right financial frame of mind to do so. Investing in a rental property means that you purchase a home, condo or apartment to rent out to tenants. You make an income from their renters fees but you are inevitably still the owner and still responsible for what happens. When investing in a rental property make sure you think about the responsibility and the costs involved to keeping your investment in the green.

What to do with your Rental Property

One of the things you need to consider is what type of renters you want in your rental property as well as whether or not you will give landlord permission to paint. Are you looking for short term renters or long term renters? You can choose how long you want to make the lease for. If you are considering a short term accommodation then you will be able to charge a little more, especially if you are using the property as a holiday home or vacation home for travelers. You can charge nearly double the amount if you are renting the place out per week instead of per month or per year.

If your investment property is close to a beach or in a tourist town then making it a vacation or backpacker rental is a great option. Backpackers often love the idea of staying in their very own house, especially if furnished, instead of a hostel and will pay the extra money to do so. However, when using your rental property as a traveler's accommodation, you need to ensure you have adequate insurance to pay for any losses, damage or theft that comes with renting the place out to travelers.

If your rental property is close to a university then another option is to use the place as a student accommodation. Students are a lot less wild than travelers but you still need to include insurance for things like theft and rental protection in the event your tenants bail before the lease is through. Students are typically in town for 6 to 8 months and thus they may not be willing to sign a lease for longer than this. You may choose to rent the place out furnished or unfurnished. Furnished rental properties often attract students from out of town or overseas that do not have a lot of furniture with them.

You may prefer to stick to the standard rental agreement with a family, a couple or a singleton. A standard lease agreement is around one year in length and comes with an unfurnished home. You can choose to include electricity and water bills as part of the rent or you can get your tenant to pay for it (as long as the utility bills are not split in a complex). You can pick and choose the rules you want your tenant to follow including whether or not you allow pets, whether or not you allow smoking inside, whether or not your tenant can sublet, paint a room, put holes in the wall, change the flooring or renovate the kitchen. All of these things should be clearly outlined in your lease agreement.

When investing in a rental property make sure you are 100 percent confident in your tenant. Check references, set up an interview and do a background check if necessary. Furthermore, always invest in enough renters insurance for property managers and investors so that you are completely protected from all disasters that could occur. Look for a policy and a company that specializes in investment properties so you know you and your investment are in good hands.

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