Many wise investors realize that rental property is a great way to grow long-term wealth. With the homes being well taken care of, the maintenance of multiple houses is not astronomical, and you make a decent amount of money on a monthly basis from each rental property you own. While this seems like a simple process, there are a few things that you need to be aware of before beginning a rental agreement. The better prepared you are for various situations to arise, the more successful you will be in the long run.
Here are five facts about rental investing you can’t ignore.
Fact #1: Choosing and Purchasing Rental Property Can Be Stressful
Regardless of how many rental properties you plan to own and rent out, you need to make sure you can purchase them all at a reasonable rate. The cost of the home will have a direct impact on how much you can make each month. If you end up financing the house and then turn around and rent it out, make sure you can make more money by renting out the home than what you owe in a mortgage payment. Work with the real estate agent and try to get the lowest possible amount for each house you rent out. The location of the home is something that heavily weighs into the process because if you are buying a home in an excellent area, you will always have a steady stream of income with people wanting to live in your rental property.
Fact #2: You Most Likely Have to Make Updates to the Home
If you are getting a home at a low cost, chances are you are going to have to drop a few thousand dollars to update the house. You want the house to be appealing for potential renters to want to live there. Updates might include new flooring, a fresh coat of paint on the walls, new appliances, updated countertops, and modern light fixtures. Your goal should be to have the home looking as sharp as possible, so you are sure to have tenants ready to sign a lease with you. All of the work needs to be as professional as possible and closely reflecting the latest trends. If you are not willing to update the home between tenants living there, then you might not be successful when it is time to find a new family to live in the property.
Of course, hardwood flooring is an excellent choice for rental homes because it’s durable and easy to repair or refinish.
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- Design Ideas to Revamp Your Rental Interiors (Renter’s Warehouse)
Fact #3: Choosing Tenants is a Tedious Chore
As soon as you complete your updates, you are ready to find someone to live in your home temporarily. While it is easy to jump at the first person who shows any interest, make sure to take your time with the process and choose a renter you trust will take care of the home and be responsible for making their monthly payments on time. Waiting for the perfect tenant will be worth your time in the end as you will not have to worry about them causing severe damage to the home.
Fact #4: Someone Must be Available to Monitor the House
If you are living close to the rental property, you can make it part of your weekly or monthly routine to drive in and check on the status of the home. If you are far away, however, there are property management crews that can take care of this job for you. Either way, you need to keep an eye on the home and make sure that the tenants are properly caring for the area and helping to make the house stay as beautiful as it was the day the tenants stepped inside.
Fact #5: You Need to be Prepared to Manage Repairs Right Away
One thing people often forget when they take on rental properties is that if anything goes wrong inside or around the house, it is your responsibility as the homeowner to handle these issues. Renters do not have to replace broken dishwashers or plumbing issues that arise, because that is the responsibility of the landlord. Make sure you can handle the financial burden of fixing these issues yourself or have access to professionals that can resolve the problems. You need to remain patient in the process and keep your schedule open to address the problems as they arise. If you want to be a good landlord, then handle the problems without letting tenants know you are upset or stressed, even if it is a financial strain on you.
Owning rental properties is a lot more than just collecting a monthly check. You need to have to have the finances available to fix up your rental property before listing it. You need to be prepared to handle the different problems that will arise while the tenants are residing in the property. Being aware of the entire process and all responsibilities associated with owning a rental property will make it a smooth and easy way to make extra money each month. As long as you keep this in mind, get ready to make a wise investment.