5 Rental Property Investment Tips for First-Timers
Rental Property Investment Tips are useful when you are a first-time investor. One question we want to ask is – What’s your reason for buying a house? Is your plan to buy and rent out, or buy, make certain changes to the house and sell it off to interested investors? Whatever your plan is, avoid starting off on the wrong footing. You’d need to take into cognizance some of the rules and regulations guiding the industry, such as the Fair housing Act, so that you don’t fall short of them. You also need to know that it’s not just about buying a house, it also needs to be maintained as well. Where you are unable to do so yourself, employ the services of a property manager. Here are some of the tips we believe could help you with your rental property investment as a first timer:
- Location can make or break your investment: One major mistake first time real estate investors make is that they tend to buy properties that are close to their area of residence for easy access and management. While this is good as it helps you get a first hands-on experience on managing a rental property, it limits your search scope. There could be better houses in highbrow areas you can invest in that are capable of fetching you a handsome income on a monthly basis. Even if you can’t be physically able and present to manage the house yourself, the simple thing to do is get a property manager to hold it on your behalf while you collect rent every month.
- Prioritize rent: The issue of rent is one major tip you should know as a beginner in the real estate industry. Your major reason for investing your “hard-earned money” in buying and maintaining a house, is to earn profit in form of rent. Thus, you should note that your rent is your source of income. Be aggressive in going after your rent and late charges by tenants. If you feel you are too soft hearted to do so, employ the services of someone who is not. Where your tenants stop picking your calls and no longer pay rent as at when due, do not hesitate to begin eviction proceedings against them. Make your investment your business or find someone to do that on your behalf.
- Market your properties effectively: The longer your properties sit out on the vacancy listing, the more revenue or income you continue to lose. As such, endeavor to market your real estate properties effectively. Once they are all fixed up and ready to be occupied, place them on several online vacancy listings. There are several apps and websites you can use to achieve this. Talk to your neigh ours and fellow landlords. They could have details of people who are looking for properties to rent. Also, it could be necessary to hand over the advertisement and management of your property to a professional property manager or a property management company that can help you maximize your investment in no distant time.
- Properly Screen potential Tenants: This is one other place first timers get it wrong. If you are to succeed in the real estate industry, you need to properly screen tenants. Professional property managers have a list of questions they ask potential customers. To avoid issues with rent, they also ask tenants about their credit score, which would enable them critically assess a potential tenant, and take a decision on him or her. Use these as well, or ask other landlords in your area to help you with a template of the questions they ask their tenants. It would help you structure yours accordingly.
- Minimize your renovations: Of course, you are excited at the prospects of buying and renting out your property, which thus makes you a landlord for the first time. You are advised to make several renovations to the house so as to charge higher. It doesn’t always work that way. Keep renovations at a minimum and do only what is necessary. Avoid making unnecessary changes such as to tiles or windows that are still in good condition.