It’s easy to see why so many passive income seekers show an interest in rental property investment. After all, depending on how many properties you own and where those properties are located, being a landlord can become your primary source of income. However, even the most successful landlords have to start somewhere. And if this will be your first foray into real estate investment, it behooves you to do your homework before purchasing your first property. To help ensure the success of this venture, take care to remember the following tips.
Seek Expert Advice
If your experience in real estate investment is lacking – if not outright nonexistent – it stands to reason that you’d benefit from the advice of seasoned experts. So, if you’re acquainted with anyone who has experience investing in and/or managing rental properties, make sure to pick their brains for any useful advice.
You should also consider reaching out to a good real estate investment company. In addition to helping you explore your property options, knowledgeable pros will be able to walk you through the various real estate crowdfunding pros and cons. For example, while real estate crowdfunding will require a comparatively smaller financial commitment on your part, going this route also means making less of an individual profit. Still, if you’re risk-averse or don’t have a significant amount of capital to invest, real estate crowdfunding may be worth looking into.
Consider the Desirability of the Location
There’s little wonder as to why location is everything to rental property investors – and most real estate professionals in general. The more desirable the location, the more interest a property is likely to generate – and the more interest a property generates, the more income it stands to produce. For instance, if a property is located in a high-growth area with ample demand, it’s likely to prove far more profitable than a property found in an area with very little to offer.
So, while the overall condition of a property should certainly be taken into account, location should be foremost on your mind when considering your options. Before committing to purchase your first rental property, do some research into its location. Among the factors to consider are local rental rates, crime rates, population growth and median income.
Make Sure You’re Prepared to be a Landlord
Being a landlord isn’t quite the cakewalk some property owners make it out to be. While you may think that there’s nothing more to the job than collecting rent checks, this new role requires a lot more work than you may think. For starters, as the property owner, it is incumbent upon you to fix any problems that spring up. Depending on the size of the property and your experience with property maintenance, you may be able to handle the majority of these problems yourself. However, if you invest in a large multi-family dwelling, like an apartment complex, you’ll probably need to hire dedicated maintenance personnel.
Screening prospective renters is another task that will fall to you. As much as you might wish for this to be the case, simply meeting with someone or speaking to them on the phone is not enough to determine what kind of tenant they’ll be. Instead, you’ll need to thoroughly review every rental application that you receive. This will entail running credit and background checks (with the applicants’ permission, of course), confirming proof of income and getting in touch with any references the applicants list.
If the many responsibilities synonymous with being a landlord seem like too much for you to handle alone, consider bringing a professional property manager aboard. This individual will oversee virtually every aspect of property management, from collecting rental payments to settling tenant disputes to processing maintenance requests. This option is ideal for landlords with day jobs and investors with multiple properties.
Getting your hands on the right rental property can do wonders for your finances. A well-maintained property in a desirable location stands to generate tens of thousands in passive income on a monthly basis. Still, entering the rental property game with the presumption of success may prove misguided. As is the case with any other venture, you’ll need to do your research and put in the prep work if you truly wish to make the most of your first rental property investment.