To many of us, rental property investments seem like sure-fire money-makers. After all, if you’ve never dealt with the various responsibilities and financial obligations that are synonymous with rental property ownership, it’s easy to see why being a landlord would strike you as an attractive prospect. However, it’s vital for first-time investors to understand that profitability is never a guarantee when it comes to rental properties – or any type of investment, for that matter. To maximize your chances of seeing a solid return on rental property purchases, put the following tips to good use.
Have Prospective Purchases Meticulously Inspected
One of the easiest ways to lose money in real estate is investing in properties that require significant repairs and/or renovations. Such money pits stand to bleed you dry financially and give you a serious case of buyer’s remorse. Considering how much money is at stake with most property investments, it’s in your best interest to have any property you wish to purchase meticulously inspected.
Licensed building inspectors, plumbers and electricians can provide you with an accurate accounting of a property’s overall condition, thereby enabling you to make an informed purchasing decision. So, no matter how certain you are of a property’s desirability, don’t neglect to have it inspected before getting started on the paperwork.
Utilize Real Estate Crowdfunding
If you don’t want to shoulder the burden of property investment by yourself, consider taking part in real estate crowdfunding. Per this investment model, an experienced scout locates good investment opportunities, which multiple parties then invest in. Low minimum investments and minimal time commitments are among the foremost advantages of this model. If you’re currently asking yourself, “What is real estate crowdfunding?,” get in touch with a highly-rated real estate investment company on the double.
Hire a Dependable Property Management Company
If you’re inexperienced at managing rental properties or simply don’t have sufficient time to devote to this venture, consider working with a seasoned property management company. The right company will handle everything from upkeep to rent collection to tenant screening, thus relieving you of a considerable burden and making your properties more desirable to prospective renters.
Thoroughly Screen Potential Renters
Another common way property owners lose money is failing to properly screen tenants. For example, if a prospective tenant has a bad credit history or has faced evictions in the past, renting to them is a financially unwise move. Depending on where you’re based, evicting delinquent tenants may prove exceedingly difficult, if not outright impossible. So, even if a potential renter is able to present themselves well over the phone and/or in-person, you should never forgo the screening process. If you lack the time or resources to screen rental applicants, consider farming this task out to a good property management company.
Repair Problems in a Timely Manner
No matter how new or well-maintained a property is, the occasional problem is going to arise. In the interest of saving money and maintaining a solid professional reputation, you should repair these problems in a timely manner. The longer certain issues are allowed to linger, the more serious they’re likely to become – and the costlier fixing them will ultimately be. Furthermore, if you develop a reputation for regarding repairs and maintenance as an afterthought, you may have trouble finding people who are keen on renting from you.
Maintain Good Relationships with Tenants
Developing adversarial relationships with tenants won’t serve anyone well. This not only increases the chances of late rental payments, it practically guarantees that you and your properties will be trashed online. With this in mind, make an effort to stay on good terms with your renters.
This means being attentive to any problems they encounter and not regarding their concerns as unimportant. For example, if a tenant is having trouble with one of their neighbors, you should do everything in your power to resolve the issue amicably. Furthermore, if a tenant is unable to pay their rent by the usual due date, try to approach the situation from a place of understanding. This isn’t to say you should let them get away with non-payment of rent, but if they just need a small grace period, this shouldn’t be much of a problem for you.
The right rental property purchase can generate a massive return on your investment. On the flipside, a rental property that’s less-than-ideal can do considerable damage to your finances. Since creating passive income is the primary goal of most rental property investors, it’s only natural that property owners would want to see the largest possible ROI. Fortunately, with the previously discussed pointers at your disposal, generating a healthy amount of income through rental property ownership should be well within your abilities.