Given how large an investment a good rental property is, it stands to reason that you’d want it to generate the highest possible returns. However, if you’ve never owned or managed a rental, it’s easy to see why this might strike you as challenging. While it’s true that making your first rental profitable will take a bit of effort, doing so should be well within your capabilities – assuming, of course, you’re working with the following pointers.
Get Educated on the Real Estate Market
Investing in a rental property without taking the time to learn about the real estate market is liable to facilitate some truly undesirable financial consequences. So, before committing to purchase your first rental, it’s imperative that you take the time to educate yourself on the tenets of a desirable property, as well as the qualities of a favorable location. Furthermore, if your current locale doesn’t have a particularly strong real estate market or robust demand for housing, you’ll need to study up on cities, townships and states that are better for this type of investment.
Fortunately, there’s no shortage of ways to learn about the real estate market. For example, if you have any friends, relatives or general acquaintances who have owned and/or managed rental properties, take care to consider any advice they’re willing to offer. You can also learn a lot from an established real estate investment company. In addition to teaching you all about location research and property inspections, seasoned real estate experts will be able to educate you on a plethora of practical high net worth investing strategies.
Always Research Locations
Skimping on location research is liable to result in an investment you truly regret. So, regardless of how appealing a prospective purchase is, make a point of researching its location. Since location is the most important factor in any real estate investment, regarding it as an afterthought is among the biggest blunders a fledgling investor can make.
When conducting your research, take care to look at local property values, home prices and rental rates. Gathering this info will help ensure that you have a clear understanding of how much you can expect to make with a rental property in a given locale. You should also take some time to research the local economy, job market, growth school quality and crime rates.
Stay on Top of Repairs and Renovations
Regardless of how favorable a locale your rental property is found in, allowing maintenance to fall by the wayside can effectively reduce its value, safety and general livability. Furthermore, allowing certain repairs and renovations to go unaddressed for long periods can result in low renter retention, withholding of rental payments and scathing online feedback. Not only is this approach to maintenance likely to drive away existing tenants, it may also reduce interest for new rental applicants.
So, in addition to hiring enough maintenance personnel to tackle day-to-day upkeep, take care to address necessary repairs/renovations sooner rather than later. As financially cumbersome as you may find this, refusing to address such issues is liable to cost you far more in the long run.
Take Applicant Screening Seriously
If a unit’s occupants are unable or unwilling to pay their rent, the unit isn’t generating any income. However, evicting non-paying tenants after the fact can prove very time-consuming and burdensome. Landlords who want to nip this issue in the bud would be wise to take the screening process for rental applicants seriously.
Taking the time to look into an applicant’s credit, eviction history, criminal background and income situation can help prevent you from taking on high-risk renters. Additionally, landlords who lack sufficient time to carry out the screening process on their own should get in touch with a dedicated screening service.
It’s only natural that you’d want your first rental property to generate maximal returns. After all, a good rental property is far from a small investment, and it stands to reason that you’d want to get your money’s worth. That being the case, you’d be wise to study up on the best ways to increase a rental’s odds of profitability. While this may strike fledgling landlords as a hefty undertaking, making a rental property profitable isn’t nearly as difficult as you may expect – especially if you’re willing to act on the advice outlined above.