Tenets of a Successful Rental Property Investor
A good rental property can be a smart money investment that pays off for decades – if not generations. Still, this isn’t to say that success is guaranteed to rental property owners, especially those who are fairly new to this area of investment. So, if you’ll soon be jumping into the rental property game, you’d do well to educate yourself on the tenets of successful investors. By understanding – and embodying – the following qualities, you can effectively set the stage for success in your rental property investment endeavors.
Aptitude for Doing Research
To call location important to rental property investors would be an understatement. The location of a rental property can play a vital role in determining what kinds of returns you’re likely to see from such an investment. So, if you’re currently in the market for your first rental, take care to conduct some location research before proceeding to put forth any offers.
To help determine a location’s overall desirability, there are a number of key factors you’ll need to look into – with the local economy, population size, and rate of growth chief among them. These factors – as well as others – will provide you with a clear picture of how much demand for housing exists within a given area. Needless to say, the more demand there is, the more profitable a rental property in this area is likely to prove. Local property values and rent prices should also be taken into careful consideration. After all, if properties that are similar to the one you’re looking at are being rented for fairly low rates, it’s reasonable to assume that you’ll be unable to get much more out of local renters. So, when considering how to invest in real estate, one must never discount the importance of proper research.
Insistence of Assessing the True Value of Properties
As any experienced investor will tell you, purchasing a rental property that hasn’t undergone a professional inspection is a risk that isn’t worth taking. When investing in something as expensive as a rental property, it’s strongly recommended that you know exactly what you’re getting into. So, no matter how many personal walkthroughs you’ve done, every rental you invest in should be meticulously inspected by a certified professional.
For starters, a professional inspection will ensure that you have a solid understanding of a property’s overall condition. There are multitude of problems – ranging from relatively minor to extremely serious in nature – that are likely to escape the gaze of non-professionals, and if any outstanding issues rear their heads long after a sale has been finalized, you may find yourself struck with an acute case of buyer’s remorse. Secondly, in the absence of a formal inspection, you may find yourself unable to buy landlord insurance for the property.
The results of an inspection can also provide you with justification for requesting a reduction in price. After all, if an inspector turns up any problems that the seller was unaware of or neglected to mention, you have every right to ask that they adjust their asking price to reflect the cost of making necessary repairs or renovations.
Willingness to Properly Screen Potential Tenants
If you take on tenants who are unable or unwilling to keep up with monthly rent, you’re going to have a hard time profiting from your first rental. To limit your odds of allowing unreliable renters to occupy your property, take care to screen every prospective tenant who submits an application. With each individual’s permission, you should look into their respective monthly incomes, employment situations and criminal backgrounds. You should also make a point of getting in touch with any references they provide, especially employers and previous landlords. If you can’t be troubled to carry out the screening process on your own, reach out to a highly-rated screening service or delegate this task to any property managers in your employ.
Purchasing a good rental property can be among the most financially-savvy decisions you ever make. However, many of the investment opportunities you come across aren’t going to be slam dunks. Rather, a fair number of them stand to lose you a considerable amount of capital. As such, investors who are looking to find success through rental properties will need to do their homework and carefully consider the qualities outlined above.
