How to plan the best time to buy rental property


Written by:

Depreciation, mortgage insurance and other factors can affect owning a rental property. In fact, if you’re financing another property while you have a mortgaged rental space on your schedule, your rental may count as a monthly loss.

When you buy a rental property, your lender will allow you to use 75% of the rent money you collect to offset a mortgage on that property. For example, if you’re generating $3,000 in collected rents every month, a property lender would give you $2,300 of net income to offset the mortgage payment.

So when’s the best time to buy?

Timing is another important factor, here. If you bought that rental property in the last 12 months, when the tax return wasn’t due, that same 75% rule applies. This is a great way to offset mortgage payments. If you purchase property, you have until October of the following year to use the 75% rule. All you need is an IRS extension form.

Your new rental property doesn’t even need to be occupied by a tenant, though your lender will still require a rental property appraisal and operating income analysis. Lenders do this to ensure that the rents you charge are consistent with your local market.


SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.





All of this means that timing is essential to owning rental property. If you’re an aspiring landlord who’s wondering how to finance a venture like this, bear these rules in mind to get the most bang for your buck (and a great deal of help from a lender).

This article originally appeared on and was syndicated by

Featured Image Credit: