If you want to start a rental property business, know that research is your best way to get started. Since you plan to rent out the property and gain a secondary source of income, it pays to learn everything there is to learn to make your investment successful. Aside from knowing the legal requirements, your first step is to find yourself a rental property you can buy.
You have many options available, such as a single-family home, vacation home, small multi-family building, or even a condominium unit. Once you made up your mind, there are numerous considerations you need to take into account.
A Tip About Location
We’ve heard it over and over again. When it comes to real estate, the most critical factor is the location. But before you stress about the location, identify your target tenants first.
Location does matter in real estate. But remember that you are investing to rent the property out. The good news is, there is always a great location wherever you go.
For one, different people have different lifestyles. Tenants can be students finishing their studies, workers from different companies, or couples starting a family. Each has different needs, preferences, and circumstances.
Let’s say you are interested in buying a condo for sale. You like how such investment property tends to be affordable and already has a homeowner’s association in place. This also appreciates in value and offers amenities uncommon to other income properties.
If you intend to make a condominium purchase, you’ll want to buy from an already established condo developer. For one, they already did the complicated task of looking for the best location in town. All that is left is to identify who you want to tenants to be.
Finding Yourself the Right Tenants
It is so easy to find a tenant, but a high-quality tenant is hard to come by. Since the success of your property investment also lies in the kind of tenants you welcome, it won’t hurt to be picky about your tenants. There are steps you can take to find the right tenant.
- List your non-negotiables. List a set of criteria that will define your ideal tenants. Consider your HOA rules to avoid future problems.
- Verify their income. They should have a stable employment history. As a general rule, your tenant’s monthly income should be at least three times your rental price.
- Do a background check. Ask for their past landlords to know about their rental history. As much as possible, don’t skip a background check.
- Keep in mind the tenant’s rights. One should never discriminate against a tenant just because of their race, color, religion, sexual orientation, or background. Ignore prejudice and stay compliant with the law.
Stage the Property Before Marketing
Many investors would rather market their properties as-is. They believe that as long as the property is in great shape and in a desirable location, tenant applicants will flock in their emails. But if your goal is to make the most out of your investment, you’ll want the place to look great in photos and in real life.
Start by checking if there are any necessary repairs or maintenance tasks due. Find yourself a professional cleaner and allow them to take care of the place. Next, you can start staging the property.
Staging the place allows your property to stand out from the online listings. This gives the area a move-in ready feel and show tenants you are serious about keeping the place clean and in tip-top shape. Staging is one of the best ways to attract quality tenants asap.
Stage the property by adding some furniture even if you intend to rent it out unfurnished. This will help tenants reimagine how it would be like living in your property. You can always rent furniture for staging to use when taking marketing photos and videos and for viewing.
Offer a Reasonable Rental Price and Contract
You are here to make a profit, but you must be reasonable when putting a price over your rental property. You could scare quality tenants away for posting a too pricey rental rate. If you are not sure how much rent to charge, do your research, and ask for recommendations.
Check how much the rental prices of similar properties nearby are. You also need to consider the value of your property, age of the property, layout, location, square footage, and updates. You can also check for comparables online or in person.
You also have the option to consult with a realtor. They can help you set a reasonable rental price. They can even help you with other real estate related issues, making them great advisors for your income property.
An income property can be a great way to start your real estate investment journey. You can earn passive income while still owning the property. Although challenging, you can rely on different professionals in case you need expert help. If you want a more successful income property investment, you can use this shortlist as your guide. Trust your gut, do a lot of research, and don’t hesitate to reach out for professional assistance to acquire the best results.