If you are an investor that purchases cheap homes to rent out to people then there are many risks that you are susceptible to. These risks include finances, the home, and the tenants.

One of the biggest risks that you take when you purchase low cost or foreclosure houses to rent to people is the financial issue. You must be sure you have the money to fix a place up to make sure it is livable. You also need to be sure that if you cannot find a tenant for several months you will be able to absorb the costs until you get someone in. Many investors fail when renting houses because they take too long to find a tenant that can pay them any money. Plus, some states take a really long time to have a tenant thrown out of a house due to non payment. Always research this and write it in the contract that if they are late you can have them out in 14 days. If you have a contract then it will be valid.

The house you buy itself is very important when you want to use it as a rental property. This is because if it is not in a proper livable condition you could be in trouble. If you put a tenant in a house before it is considered acceptable then you will be required to make the repairs immediately, even if you don’t have the money. This could put you in a really bad situation. Make sure the house passes an inspection before you put a tenant inside of it. Also, you may want to put in your rental agreement with the tenant that minor repairs can be fixed by the tenant at their own expense.

The tenants that you put in a house need to be reliable. If you rent a house to college kids that party all of the time then you can be sure the house is going to have serious damages that need to be repaired when they leave. Plus, are they going to pay for their own damages to you? Most likely not.

There are many risks that you take when you purchase cheap homes in an effort to rent them out to people. Always consider the price of the house, the tenants you choose to move in, and the condition the house is in and any repairs that need to get done. This will help you be more successful.