Being a landlord is a lucrative business, especially if you have the capital to invest in a profitable rental property. Real estate is something that won’t lose its value in the long run but increase. If you get the right property and find some long-term tenants, you may enjoy a steady income for years to come. This apart, you may even get tax benefits from rental properties.
If you’re new to this, getting an idea about the market and following the suggestions below can help you strike the best deal in real estate rentals.
Consider investing in turnkey properties
For new buyers, turnkey properties can be highly useful. There will be no need to handle renovations or repairs, as the property will be in perfect shape and form. It will be ready for immediate renting, and you may not have to go through the process of finding the right tenants, as the property will be in demand. In other words, it will save you a lot of time and resources.
Study the market properly
Before contacting a professional, you should do your research on the market and check the listings. Compare the prices of properties in the region before shortlisting a few. You may also consider exploring the neighborhood of shortlisted properties before investing. Take your time to reach decisions and make a list of amenities and facilities in the region. This knowledge will help you convince your tenants better.
The crime rate in the place
When you’re deciding on the location, make sure you have an idea about the crime rate of the place. No tenant would like to inhabit a vulnerable and crime-prone area for long, no matter how beautiful the property is. Hence, it’s your responsibility to ensure their safety by researching the rate of criminal activities in the place before buying.
Customize your requirements
While buying a property to rent out, you should investigate it from the perspective of your potential tenants and make a list of their preferences and probable requirements. Understand what they may need the most and if they can get it by living in the house you’re buying.
For example, if you wish to rent the house to a family with children, you should consider its proximity to schools, healthcare centers, grocery centers, bus stops, etc. The experts at StewartRealtyLLC.com feel that customization is the key to ensuring the happiness of the dwellers. This apart, you should also take the climatic conditions of the area, the minimum costs of living, and demographic factors into account while buying the property.
Consider your finances
It’s advised not to invest in real estate properties if you have debts, student loans, or running mortgages to pay. Invest in a property only if you have ready cash or a stable income. Many aspiring landlords think that investing in real estate property can solve their cash issues. But they should keep in mind that getting the right tenant is time-consuming, even for in-demand properties in favorable locations. So, go for it only if you have the capital.
Start with single-family homes
For new buyers, it’s best to invest in single-family homes first. Buying a condominium is not only expensive but also hazardous. Not only can you get it filled up quickly, but single families don’t pose much damage to the property, which you may need to repair. Further, being a landlord isn’t easy, and the family may still overlook your mistakes if you share a good relationship.
Know about the mortgage rates
Buying a rental property may invite a higher mortgage rate than buying a home to reside in. If the interest rate is high, you may not be able to garner huge profits from your real estate investment. So make it a point to analyze the mortgage rates and opt for low-mortgaged properties to start with.
Invest in familiar fields
Just buying a good-looking property at random may not be the right move for real estate investments. You should add the experience of living with it to ensure high returns. Use your life’s experience to search for the best deal. For example, if you’re a corporate professional, buy the property near a busy office area. But if you’re a nature photographer, you may choose a secluded location amidst greenery.
Create an investment budget
This is almost mandatory if you want to buy the house of your tenants’ dreams. Expenses should never hinder investment, especially when it comes to quality. So, create a proper investment budget and keep some money aside for renovations or repairs, if any.
Hire the best contractors
If there are renovations or repairs to be done on the newly-bought property, you should hire only licensed and experienced contractors to handle the same. It’s unwise to make your tenants feel that you have selected cheaper options to save a few bucks. On the other hand, if you take the hassles of renovating the property beautifully, your tenants will be happy. They may discuss your efforts with their contacts, thus increasing your business visibility through word-of-mouth promotion.
Consider the risks vs. rewards
Real estate investments are no cakewalk. There are risks, as well as rewards in buying a rental property. While the risks may range from tenant dealing, mortgage payments, maintenance costs before you find tenants, etc., the rewards may likely be a stable income, tax benefits, property value increase, and more. You should compare both and take only those risks that will give you greater rewards in the future.
Check the background of potential tenants
This is an important step in the tenant screening process, which shouldn’t be ignored at any cost. Ask them for references of former landlords, neighbors, and necessary documents to study those with time. If there seems to be any glitch, you should ask them about the same right away. Don’t sign the lease unless you’re 100% confident about your tenants.
Buying a home and investing in a rental property are widely different from each other. In the former, you’re mainly responsible for the comfort and safety of your family but in the latter, your responsibilities increase manifold. The process also gets more complex, so follow the aforementioned suggestions carefully. And don’t forget your homework. If things go well, you’ll gain the confidence to invest in other properties and turn your efforts into a lucrative business.