If you are considering investing in rental property, you likely have a number of plans for picking a property, managing your future tenants and more. However, if you have no experience in owning rental property, you may find that you have a lot to learn before your investment becomes a success. For this reason, many property owners hire rental property managers to help them handle problems, while others simply take the plunge. Regardless of your plans, here are five tips that can help new landlords make the most of their investments.
Have Reasonable Expectations
Most property owners chose their investment because of its reputation for consistent inflows of payment from rent and other fees. While this is possible, you will also need to spend money on taxes, rental management services (such as building maintenance) and other expenses. Save yourself from disappointment: work for a positive cash flow, but keep the rest of your expectations modest.
Balance Your Effort and Income
Are you ready to dedicate time and effort to your rental property, or are you worried about balancing your responsibilities with other duties, such as a full-time job? For many landlords, the cash flow from their property may be worth the effort, while others may find that careful organization and planning makes it possible to complete all of their tasks. Meanwhile, some landlords will find it necessary to hire a residential property management company to help them take care of various aspects of the investment. This not only allows them to focus on their other responsibilities, but rental property managers can often reduce maintenance costs with a few simple updates. Find the option that works best for you to avoid stress.
As a landlord and property owner, you need to be aware of all applicable state and federal laws regarding your liability and duties. You should also be aware of the state of your property itself, the lease, the type of insurance you should have and more. While you should research a lot of these factors yourself, don’t hesitate to contact lawyers, accountants, insurance agents, rental property managers and other professionals if you have questions, concerns or need help.
Investigate Potential Tenants
Don’t forget that a rental property isn’t just a source of income: if done right, it is also someone’s home. As such, you’ll have to deal with all different types of tenants, ranging from the good to the bad to the simply weird. To avoid problems later down the line, the best thing you can do is check references, run credit checks and even drive by their current living space to see if a potential tenant is really someone you want to be living in your property. If you are working with property management services, rental property managers can also help with this process.
Make an Emergency Fund
Unexpected problems are almost guaranteed to happen at some point or another. For this reason, it is important to have an emergency fund that you can use to cover expenses that aren’t included in your insurance coverage. You can create this secret stash out of your rent payments; think of it as a further investment in your rental property. Some landlords recommend that this fund amount to at least 20% of the property’s value, but any amount will help.
Rental property can be a great investment if handled properly. Whether you choose to work with a property manager or figure it out on your own, it is important to make smart decisions to keep your tenants happy and your investment sound. Follow the tips above to get started! For more, read this link.