Fundamental Tips for Buying and Managing Your First Rental Property
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Purchasing your first investment property is an exciting experience, but it can feel a little overwhelming. It’s a lot different from buying a home of your own, so even if you have experience navigating the home buying process, you have a lot of learning to do before you can buy and run a successful rental.
From picking out the perfect property to hiring management help, the following tips from Multi Point Home Inspections will guide you through smoothly.
Choose the Right Property
There’s a reason why real estate investors always stress the importance of location. The location of your investment property will have a significant influence on your monthly expenses, vacancy rates, and how much rent you can charge. As Millionacres explains, some important location factors to consider include the quality of nearby schools, unemployment rates, job growth, walkability, crime rates, and the availability of public transportation. Research the housing marketing in your desired location so you can get an idea of what you can afford and how much competition you’re up against.
You also have to consider the type of rental property to invest in. Are you looking to purchase a single-family residential home, apartment, or duplex? There are pros and cons to each type of investment, so make sure you do your research before deciding on your investment strategy. For example, single-family properties require a smaller investment compared to multifamily buildings, but vacancies will have a larger impact on your profits.
Research Your Rental Market
Researching your rental market is another important step to take before buying property. A rental market analysis will help you determine whether a rental in a specific area or neighborhood is likely to generate positive cash flow. SFGate recommends studying local trends to discover where tenants are coming from and why they may be leaving and moving elsewhere. You can talk to renters or landlords living in the neighborhood to find out this information.
Prepare Your Property for Renters
Before you welcome tenants into your property, you may want to make a few repairs and improvements. Walk through the home and make a list of everything that needs to be repaired, like plumbing problems and electrical issues. Have the place inspected for potential hazards, like signs of mold, broken window locks, and malfunctioning smoke detectors.
If you have room in your budget, consider going a step further by making upgrades that might equate to higher rent. Some rental home upgrades with the highest ROI include installing a washer and dryer, central A/C, new countertops, and energy-efficient appliances. You may also want to replace outdated carpets with low-maintenance hard flooring.
At the very least, giving the walls a fresh coat of paint is an excellent way to make your rental feel cleaner, brighter, and newer. While you’ll need to hire a pro to handle some of these projects, you can DIY certain modifications.
Work with a Property Manager
If you’re new to rental property management, consider hiring a professional property manager. A good property management company will help you set rental rates, market your property, screen tenants, collect rent, respond to tenant concerns, and coordinate both routine and emergency maintenance. Taking on all these responsibilities yourself can be extremely stressful and time-consuming, especially if you live far away from your rental. Save yourself a few headaches and look for a reliable property manager to help you out.
One of the best choices for new investment property owners is partnering with an option like TurnKey. They offer affordable and professional full-service management with a stellar reputation, so being associated with them brings instant credibility to your rental.
Screen Your Tenants
Last but certainly not least, you should screen your tenants to ensure they are on the up and up. Fortunately, there are many ways you can do this, including doing background checks to investigate factors such as employment history, income, and credit history. However, it’s important to explore your state’s privacy laws to ensure you don’t get into any trouble by looking into a potential tenant’s history.
Thorough research is essential for every part of your purchase, from choosing a location to finding a property manager to help with your responsibilities. Just remember, all this work starts paying off when you collect the first rental check!
For your home or business, turn to Multi Point Home Inspections for more valuable tips and information.