How To Invest In The Property Rental Business

Going into the property rental business can bring steady returns, especially for those with idle properties. If you want a reliable source of income with minimal effort, then rental property is hard to beat. You may have heard a lot of horror stories about problematic tenants from those who have apartments, but notice that most of them do not sell their rental properties unless forced to.

The truth is a lot of retirees depend on the monthly rental payments from their rental properties for their everyday expenses. Despite everything, rental properties normally do not go bankrupt like many small businesses. Besides this, they rarely are as demanding of your time as other ventures. That is why they are a favorite investment of many people who want less hassle and risk.

However, there is a downside to the safety of this business. The lesser risk comes at the price of lower returns. It will take a relatively long time to get back your investment compared to other ventures. The cash flow, while steady, is small in comparison to the size of the investment.

The registration requirements for a property rental business are plenty and only a partial list is indicated here. Assuming that you will be constructing your own, here are some of the items to keep in mind:

Obtain a certified true copy of the property from the register of deeds and read the restrictions. Check first if the property you have or plan to acquire is zoned for the construction of the type of business you are planning. Know, too, the restrictions like the maximum number of floors you can build. These restrictions may possibly make your investment not feasible, and so you must be diligent in this research.

Register with the appropriate agency. Register with the Department of Trade (DTI) if you will be the sole owner or to the Securities and Exchange Commission (SEC) if you plan to be a corporation. Have your accountant or lawyer prepare the needed papers. Get a Barangay Clearance.

Obtain the necessary permits. Obtain a Building Permit and Occupation Permit from the municipal or city hall. You must also secure your Fire Safety Permit here.

Be aware of the legalities. Know the latest legal requirements especially as stated in the latest National Building Code.

Register with the Bureau of Internal Revenue. Get your certificate of registration (COR) here. This will contain the schedule of your tax obligations with the national government. If you still do not have a Tax Identification Number (TIN), you obtain this here along with your authority to print official receipts. Have your receipts printed.

Be very selective in screening tenants. Reject those who have a strong chance of not paying their obligations. Also, do not allow those who will likely cause too much wear and tear on your apartment.

Your lease agreement must be carefully drafted. It would be best to have one drafted by a lawyer with experience in making lease contracts or apartments. Buying a ready-made document from a store may not only result in an unfavourable agreement but there may be legal problems later on.

Keep abreast of current rental laws. The rules on how much you can increase rentals and the ejectment procedures constantly change so you must know the latest regarding this.

Real estate property investments are sound investments, but you must know what you are doing to avoid mistakes. Since real estate requires substantial capital, and laws and trends change fast, it would be prudent to learn more about this venture.

(excerpts taken from: http://www.businesscoachphil.com/how-to-invest-in-property-rental-business)