The idea of being a landlord at first sounds like the stuff of nightmares, but when done responsibly and with caution and with real estate investment strategies, rental estate investing can be very lucrative. We talked to five seasoned investors about their best tips for new landlords.
A highly informative and instructional post on rental estate investing that will show you how to get in and thrive at it!
Five Tips From Experienced Investors Will Help You Save Time, Money And Stress:
1) Always Have A Business Plan
You can’t just go out and buy an apartment building and expect to be successful. It’s just not going to happen! When investing in rental property you must have a business plan in place before you invest any money. A good business plan will outline your timeline, what your goals are, your cash requirements and much more. It is critical that you know why you are buying the property before you make the investment. Also, make sure you understand what it will take to increase the value of the property over time.
2) Do Your Homework
Before investing into a rental property be sure it is as profitable as possible. In most cases you will be investing into a rental property that has already been paid off or is at least close to being paid off. In those situations you will need to do your due diligence on the property to see how much it has been used and the upkeep of it. Then make sure you understand how much money the owner will be making in rent because if they are making a loss, this might not be the best investment for you.
3) Understand The Rent Collection Process
First, check out online reviews and read as many as you can about the area that you want to invest in. Next, have a list of questions ready to ask the property owner, including you should ask them to do an inspection of the property with you. You should also make it clear that you will be inspecting their rent collection process regularly as well. While there are plenty of great landlords out there, unfortunately they are not all trustworthy. However, if you follow this tip you won’t be throwing good money after bad.
4) Always Go With A Good Contractor
When investing in rental property, having a good contractor is key. Some people might think they can save a few bucks by hiring their own contractor, but in the long run you will end up paying more. It is not worth it to risk your investment at an unknown contractor that may or may not do any of the repairs properly. Always go with a reputable and experienced contractor and make sure you put all your faith in them. Listen to their advice and be sure to follow through. In most cases, quality contractors are worth the extra money required for them on a weekly basis.
5) Get An Established Tenant
When investing into rental property it is best to start with an established tenant rather than a new one. In most cases a new tenant will be more expensive and will require you to check them out. In addition, they can be problematic as tenants can move out early and you may not get your money back for that month. With an established tenant it is normally much easier to collect rent as they are usually already paying the rent on time.
These are a few real estate investment strategies that as an investor one can use.
Top FAQs for rental estate investing
If you are new to Rental Estate Investing, here are some of the most frequently asked questions that you will need to know.
1. What Is A Good Rental Property?
A good rental property is one that has a stable and consistent tenant in place with a solid agreement stating the terms you both agree upon. A bad rental property is one that doesn’t have any income coming in, or if the monthly rent payment is not consistent. If you are looking for a good rental property make sure it has more than 3 bedrooms, with 1 bathroom, and at least 1 parking space available on-site. This type of home usually rents for more than others as well.
2. How Do I Find A Rental Property?
Well, the best way to find a good rental property is to use an online database. Whether you want a house for rent or an apartment for rent, there are several databases that are available that can help you find the perfect place for you. Just remember, not all properties listed in these databases are suitable for rental purposes. There are many factors to consider when looking at each property including the condition of the property and how similar it is to what you desire.
3. How Do I Find A Tenant?
When it comes to finding a tenant, the first place that you will want to look is on Craigslist. There are usually several people looking for housing on Craigslist every day. And the best part is, many of these people are willing to pay above what you might be asking if they really like your rental property and think it will meet their needs. Just make sure you are careful when choosing a tenant for your place. You don’t want to rent to just anyone because anyone can turn out to be bad news later on down the road.
4. How Much Do I Charge For Rent?
The ideal rent for a property will be 15% more than what the market is paying for the same type of housing in the area you are renting in. This is ideal because if you price your property too low, you will not make any money at all and it will not be worthwhile to waste your time. But if you go above the market value, then you might have a hard time finding tenants willing to pay what you need them to pay for rent. It’s important that you find a balance between the two that works well for everyone involved and ensures that everyone gets their fair share.
5. How Do I Collect Rent?
You will need a professional property management company to help you collect rent. A good property management company can help you find the right tenants, provide excellent customer service and ensure that your rental properties stay in good condition. You will also need to pay your property manager a monthly fee for monitoring and collecting rent. These are things that you should not do yourself because it is complicated and time-consuming. Let a professional handle everything for you so that you can focus on what really matters – making money!
6. What Is The Best Way To Collect Rent?
To collect rent, you will need to set up a schedule for how and when the rent payment is due. You will most likely want to do this once a month. And some people even have their tenants pay every month on the same date. The best way to collect rent is to do so electronically through direct debit, PayPal or even credit card. This allows you to download money into your account quickly and easily and makes it possible for you to manage your profits on a daily basis rather than waiting until the end of the month before finding out how much money you made or lost.
7. How Do I Know If The Property Is Making Money?
There are a number of ways to measure how much money you are making from your rental properties. The best way might be to use a program that provides you with regular updates and looks at your income and expenses in real-time. This allows you to know what is going on with the property in real-time so that you don’t have any surprises come tax time.
8. What Are The Most Common Mistakes When Investing In Rental Properties?
A common mistake when investing in rental property is to fall into overpriced properties. It can be tempting to buy a property that you think will do well but it may actually turn out not to be that great of a deal at all. However, there are some good things about overpriced properties. If you manage the market well, you will have more control of how much rent the tenants pay and when they pay it too. And if your tenants are happy with the place, then the property will still generate good income without costing you an arm and a leg!
9. What Are The Best Investments For Rental Properties?
The best investments for rental properties are the ones that offer a good return on investment for you. These are properties that rent out fast and have consistent income coming in all year long. It is also nice if you can find a tenant who is willing to pay a little extra than the average market price for the rental property too. This will allow you to sell the property at any time or improve it and make even more money!
10. What Is The Best Way To Make Money With Rental Property?
There are several ways to make money with rental properties, but one of the most popular ways to do so is through refinancing. If you can buy a rental property at a price that doesn’t require you to pay too much down on the loan, then you can refinance it as soon as possible to increase its value. This allows you to make money from the increased value of the home and from the rent itself. All you have to do is find tenants who will pay for this increased value and keep them happy so that they will stay with you for a long time!
11. What Are The Best Ways To Profit From Rental Properties?
There are many ways to profit from rental properties, but one of the best ways is to invest in distressed properties and turn them into high-demand rentals. Often, a property that was once a rental property will be in the process of foreclosure or has been repossessed. This means that you will have no problem finding tenants who want to move into the properties quickly. And you can make money fast as soon as you fix the property up and get it rented out!
For more information, you can visit Calculate investment property return without a spreadsheet.
