I currently rent 2 houses --- one makes money and the other doesn't. My pointers are: Make sure your taxes+insurance do not exceed the rental comparisons in the area. A real estate agent should be able to pull comparisons from the surrounding area. Also make sure to check on forclosures in the area you're planning on buying. Sale prices of houses around a forclosure usually affects the sale price of the house so you may have extra bargaining power on your purchase. Next, expect that even in a pristine purchase, that you or the local inspector will find issues to be fixed before getting an occupancy approval. Build in 1 week and about $1,000 for various paint, an electrician or plumber visit and the like. If the house is less than pristine, up that by a factor of x2 each time more things are found. I've under-estimated multiple times and it's no fun. Make sure to get a termite inspection before you buy a house and I'd suggest strongly to pay the extra money and get a full home inspection by a reputable company. Check the better business bureau on the finalists and do your homework on getting a good one. The few hundred bucks are well worth it especially if you need to walk away - otherwise you'll be stuck with possibly expensive and time consuming repairs.
About the rental --- I go through a real estate agency and I do a full financial and criminal background check on the renters. I don't usually like referrals from prior landlords because they usually give sterling reviews whether the renters were bad or good. The worse the renters were - the more sterling and exhuberant were the recommendations. Make sure your contract is locked tight - especially around breaking a lease early, penalty's, time frames for moving and showings, as well as if the renters are not going to re-sign for another year - that you have enough time to rent while they are still living there AND that they must make the house accessible. Make sure all the utilities, repairs, etc. are mentioned. Pets are another thing - I put penalty's in because I do not allow pets in the rental property. If damage or pets are seen to be occupying - it will cost an additional. Late rent - I put in a 5 day grace period - after which a penalty is added on of $250 each occurrence. I also use a Post Office box and not my home address. I'd also recommend keeping good electricians, HVAC, and construction folks handy. Referrals are best if you don't have them already.
Also, I do not normally do month to month - but require a 6 month or full year lease. Everything must be signed and notarized. Lastly, make sure to keep all correspondence, letters, cancelled checks, accounts, etc... organized. Phone calls and phone records as well - eventually land lords either sue or get sued so having organized and complete records makes it easy come court day.
