What You Need To Know About Making Money On Rental Properties
One of the wisest and safest ways to build wealth involves rental properties. Because of the economic downturn in 2008, homeownership isn’t as easy as it used to be (we have some tips on that here). However, once you get your foot in the door, it’s actually a lot easier to own and maintain multiple properties. Once you have multiple properties, you can start to create multiple streams of income through becoming a landlord. There are many facets to becoming a landlord that you’ll want to consider. You’ll also need to do a lot of research in a few areas. The research you do will help you make an informed, wise decision when it’s time to buy properties. Take a look at the following areas when you’re looking to become a landlord and invest in multiple rental properties.
Location, location, location.
Location is paramount when it’s time to look for a new place to purchase. There are many facets you want to consider. Take a look at the development that’s happening in the neighborhood. If it’s in an up-and-coming area, many people will want to move there. Therefore, the demand for a home in that area will be high. Take into consideration other facets like schools and crime rates. Other amenities like shopping centers, libraries, and entertainment complexes are major for renters. Take these elements into consideration when you’re looking for a new place to purchase. Also, consider whether or not the area is in a highly trafficked area for employees. If many businesses have set up shop in the neighborhood, this is always a good sign. Take advantage of new technology that can advertise your properties well! Utilize 3D Tours or home staging to entice potential renters. Be sure to highlight what makes your properties worth the money!
Focus on cash flow.
When you’re dealing with an investment property, it’s better to focus on cash flow, not appreciation. As you get new tenants, find new ways to get more money out of the property. This could involve a few things. You can increase the rent. If you decide that increasing the rent is something you’d like to do over a period of time, make sure this is written in the lease and implemented before the tenant signs the lease. You can also charge extra for pets. There are many rental properties that do not allow pets at all. If you decide that you’re okay with pets, you can use this as a new source of income by charging a rental pet fee. Other ways to earn income involve charging extra for landscaping and upkeep of the grounds. While that may be mandatory from your homeowner’s association, you could put that responsibility on the renter. However, many may not want to deal with the extra headache involved in finding a landscaper. As a result, they’d be okay with paying a fee so that you can bring in people to take care of it for them.
Maintain the property well.
While you don’t need to focus on appreciation, you do want to make sure the property is still maintained well. When things break down, get them fixed. Don’t try to do too much upgrading if it’s not necessary. You don’t have to have stainless steel appliances in your kitchen to rent out your home. It’s nice, but it’s not a deal-breaker for most renters. In preparation for new renters, it is common sense to paint the walls and discard the old carpet after the previous renters leave. This is an important step, not just for the sake of sanitation, but for the maintenance of the property.
Depending on the area you live in, you’ll want to get a certain type of insurance. If you live in a climate that gets a lot of hurricanes, you’ll want to have that type of insurance. Make sure that your properties are all covered. This will prevent further chaos if and when disasters happen.
Talk to renters.
While you’re doing your research, make it a point to talk to renters. Look at the area that you want to buy in. Find the closest apartment complex. Hang out in the complex and talk to renters as they’re coming and going. Find out how they feel about the area. Talk to them about what they do like about the neighborhood and what they don’t like. Renters have nothing to lose so they will tell you the truth. Renters will give you an authentic response based on their experience. Notice the commonalities and make a decision from that informed place.
As you become more familiar with the process, it will start to feel more natural. There will be times when you’d have to deal with inconveniences. Becoming a landlord isn’t an easy process. However, if it were easy, everyone would do it. When you put in the work that it takes, you’ll be able to get amazing results. Make the investment and the sacrifice. It’ll be worth it.