When you’re new to investing in real estate, you’re probably thinking about the numerous financial benefits that are waiting to be grasped. You’ll have a tangible asset that basically pays for itself while your tenants are renting it out, and it’s increasing in value, allowing you to passively earn income.
Investing in rental property is an excellent way to build wealth and earn some pretty healthy returns. However, you have to invest wisely; otherwise, you can end up losing money and feeling frustrated.
We’re sharing some real estate investing tips for beginners today, and if you’re an experienced investor – it never hurts to remind yourself of these key investment concepts.
Choose the Right Investment Property
You’re likely to come across a number of opportunities to acquire some real estate. Once you start poking around in the market and you let people know that you’re looking for a property to purchase, you’ll be offered property after property and suggestion after suggestion.
Think about your investment goals when you’re preparing to buy. If you want something that’ll cash flow as quickly as possible, you need to pay close attention to the purchase price and potential rental income you can earn. You’ll also want a property that’s in excellent condition and won’t require a lot of maintenance expense up front. If you’re planning to invest with the intention of building value and earning most of your return off of appreciation, you’ll need to really understand the neighborhood and the rate at which home values are increasing.
Another thing to remember – you’re buying a rental property, not a home that you’re going to occupy yourself. Don’t think about what you want in a home. Think about what good tenants will want in a home. Hot tubs and granite counters aren’t always necessary unless your market demands them.
Don’t Rush the Leasing Process
After closing on the deal, most new investors are anxious to get the property rented and occupied immediately. It’s definitely important to limit your vacancy and get a good tenant in place as soon as possible. However, rushing will result in expensive mistakes and longer vacancies. For example, don’t list the home until it’s ready. Take the time to clean and prepare the property. Make sure everything is functioning and attractive. If the place isn’t move-in ready, you’ll have a hard time finding qualified tenants.
Do your due diligence with tenant screening as well. You aren’t just looking for a tenant who is employed and has a decent credit score. You’re looking for a tenant who will stay in place for the long term, help you take care of the property, and take the lease requirements seriously.
Maintenance Requires Responsiveness
As an investor, you’ll spend a lot of time figuring out where to cut costs and save money. Don’t be cheap when it comes to maintenance. It’s important that you take a proactive, preventative approach to keeping your investment well-maintained. When tenants request routine maintenance, respond with the same sense of urgency that you would if there was an emergency. This will protect the condition of your asset and let your tenants know that you care about them and the property.
Work with only licensed and insured vendors and contractors. Hiring someone off the street at $10 per hour might seem like a great way to save money, but if that worker falls off a ladder, you will be liable.
Finally, work with a property management company. Your life as a real estate investor will be a lot less stressful and a lot more profitable if you work with someone who is experienced and resourceful when it comes to things like marketing a vacant property, screening for superb tenants, collecting rent and move-in funds, and handling routine and emergency maintenance.
If you have any questions, please contact us at Rentals By Mark. We can help you have a better investment experience.