Owning your own rental properties is a great way to earn additional income each month.
Whether you want to pursue rental properties as a means to save money for your children or to earn enough to quit your day job, you can do so if you know the right way to plan your purchase, choose tenants and manage the rental property.
The following is a complete beginner’s guide for those new to real estate, telling you everything you need to know about finding, purchasing and managing rental properties in a successful manner.
Understand The Area
It is important to conduct thorough research of the area you plan to purchase rental property to ensure it yields a steady income each month.
Look at the current housing market in the area and determine whether or not it is generous to those who own rental properties. Websites such as Realtor and Zillow may help with this. However, to best understand the market, it may be best to go through a real estate agent in the area.
Many real estate experts recommend purchasing your first rental property in the area you live, in which you likely already understand all of the most important information.
Purchase The Rental Property
The next step in the process is to select the home you want to own as your rental property. Remember, this is strictly a financial investment, which means your own personal preference to what makes a home nice should take a backseat to what the market demands.
Be sure to do the numbers and make sure the home you purchase yields a return on your investment, particularly in the sense the monthly rent payments should significantly exceed your own monthly costs, which likely includes the mortgage payment, HOA fees, taxes and repairs.
Choose Your Tenants Wisely
One of the most important steps in the entire process is selecting the right tenants for your rental properties. When you fail to do your due diligence and know who exactly is renting your property, you risk experiencing tenants that destroy the home, garner you a bad reputation or simply do not pay on time.
Before selecting a tenant, make sure to conduct a thorough background check on the prospect, verify their income and be upfront and clear with them about your expectations.
While no one likes to be the mean landlord often portrayed in movies, it is sometimes necessary to be honest upfront, and then become friendlier as you gain trust in one another.
Manage The Rental Property
The last step is the most crucial as it pertains to the long-term success of your rental properties, which is managing the needs of the tenant and the rental property.
Your reputation is important, and it is vital to make all of the necessary maintenance repairs in a timely manner, ensure the property is protected from damage by the tenant and establish a policy that lets the tenant know exactly what to expect.
If you do not have time to run the day-to-day operations of your rental property, then you may want to consider hiring a property manager to do so for you, who can ensure payments are made, maintenance tasks are taken care of and the property is overall well maintained.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129