A rental property is a piece of real estate that’s used to rent out space for living and business, in exchange for monthly rental payments from tenants. Residential and commercial rentals may be located in apartment buildings, single-family homes and townhouses or in more specialized properties such as vacation homes, student housing or medical offices. Rentals are designed to provide owners with income and long-term capital appreciation.

While owning rental properties can be financially rewarding, it’s also important to carefully weigh the risks and benefits of the investment. In addition to ongoing expenses, the responsibilities of owning rental property can include legal fees (if needed to evict a tenant), property maintenance and insurance. It’s also crucial to understand lending requirements and the impact on your credit.

Top Tips for Securing the Best Rental Properties

Before you buy a rental property, make sure to research neighborhoods and find a real estate agent with experience working with investors, Halverson says. It’s also a good idea to meet with multiple lenders to get a better understanding of their borrowing terms and requirements. It’s important to make accurate cash flow projections and determine what you can afford before you start looking at specific properties, he adds.

Lastly, it’s critical to visit any property you are interested in renting, even if you know you will be doing it through Airbnb or other short-term rental services. This will help you ensure the apartment lives up to its listing and if there’s any issues that need to be addressed.