15 Tips for Rental Property Investors
If you are investing in income properties, here are some of the simplest and best PropertyLark tips for rental property investors:
1. Find a Good Location
Look for properties in up-and-coming neighborhoods where the appreciation and rental prices are likely to go up at a faster pace in coming years.
2. Don’t Overpay for the Property
Of course, you don’t want to pay more than you should for any rental property. Run careful property analytics, set a renovation budget and don’t go over your acceptable price range.
3. Don’t Renovate More Than Necessary
Your renovation plan should make the property attractive for renters, with everything in good shape. Don’t overdo the rehab if the upgrades aren’t necessary. Save your budget and maximize your returns.
4. Invest in Single-Family Homes
Single-family homes will always be desirable for renters. They typically bring higher rent prices, have better rates of appreciation and can be easier to manage than multi-family properties.
5. Diversify Your Investments
If you are planning to invest in more than one rental property, make sure you have a diverse portfolio. Own properties in different markets and don’t put all your eggs in one type of basket.
6. Understand the Market
Market research is critical for choosing the right places to invest. Study crime rates, rental prices, appreciation rates, vacancy rates and other factors. Look at the past trends as well as future projections.
7. Join an Investment Network
Consider joining a real estate investment network like PropertyLark. You can find better off-market deals on great investment properties and have access to other useful tools and resources that are designed to benefit rental property investors.
8. Proactive Maintenance
It is smart to take care of minor maintenance issues as quickly as possible. Minor repairs will be easier and cheaper to make. Otherwise, you risk the problems getting worse and more expensive to fix. Plus, a proactive maintenance plan will keep your tenants happier.
9. Budget Wisely
You have to have a budget and investment plan established before you even start looking for rental properties to purchase. Expect things to take longer and cost more than you hope, so build in enough cushion to avoid going over budget. Also make sure to have money set aside for maintenance, repairs and other ongoing ownership and landlord expenses.
10. Plan for Vacancies
Vacancy periods can and will happen, and it’s wise to build an expected vacancy rate into your overall budget. You may have a couple months in between each tenant, so don’t let that destroy your profitability.
11. Business First
Remember this is a business. Don’t let emotions cloud your judgment and run your rental property investments like a business to get the most out of them.
12. Price Accordingly
Rent price is important. You don’t want to price it too low and attract lower-quality renters. You don’t want to price it too high and have extended vacancy periods. Find the sweet spot that will keep your property occupied with great tenants.
13. Tax Planning
One of the common mistakes that rental property investors make is not understanding all the tax laws for passive/active income, property taxes, deductible expenses, etc. You must have a tax plan to minimize your tax liabilities.
14. Property Management
Are you prepared to be a landlord? If the answer is no, you may want to hire a property management company to handle the rental unit(s). As you invest in more properties, a trusted property manager will be even more valuable as you may not have the time to do it all yourself. Property management services may be worth the investment and can allow you to focus on other important things.
15. Have Multiple Exit Strategies
Last but not least, you have to have exit plans in place. What will you do if the rental property isn’t performing like you hoped? When and how will you sell when it’s time to move on? What happens to the property if something should happen to you?
These are some of the most important issues to consider as a rental property investor. If you are interested in joining the PropertyLark investment network, please fill out the form to the right to see if you qualify.