Even though real estate investing is risky, it’s still a smart way to invest if you do it right. Plus, you can get many long-term returns if you opt to invest in property rentals. Now, the rub lies in finding the balance of selecting a property that fits your finances, will provide you a return on your investment, and getting reliable tenants. Ready to learn more? Teaching Real Estate 101 shares the following insight.
Selecting a Property
There’s no such thing as too much research or too many questions when evaluating a property. Consider these features:
- Type of area: Do you prefer urban, suburban, or rural?
- Amenities: Are shopping, schools, and the hospital close by?
- Occupancy rates: If the area has a high vacancy rate, it may be challenging to find reliable tenants.
- The neighborhood itself: Is it safe, stable, or growing? What is the demographic of most of the residents? The neighborhood lifestyle impacts your renters, whether you’re looking to attract university students, young families, or retirees.
One of the biggest challenges and costs involved with rental property, besides your initial investment, are the repairs and upgrades. Now, it’s inevitable that you’ll need to do maintenance, including replacing things like the furnace, air conditioner, appliances, windows, or roofing.
But, at first, especially with the excitement of a new property, it’s tempting to spend thousands on refreshing the property. Typically, the better the place looks inside and out, the more rent you can charge. Take caution though, you may be spending more money than you need to.
Real estate investor, Rick Nayar, began with his first rental property at 27 and had 25 by the time he was 30 years old. He recommends: “Don’t over-improve the property. To keep your cash flow at optimal levels, don’t spend too much on upgrades for a rental property that will likely need maintenance and repairs during turnovers anyway.”
Start with a list of possible repairs and determine what repairs are you comfortable with. Painting, some additional landscaping, and outdoor enhancements like treating or removing an ailing tree could boost your tenant search without breaking the bank. DKRenalts.net advises providing gardening space to give your renters the freedom to plant some flowers or grow a small garden if they want. “There have been countless landlords disappointed to find that the beautiful new grass they installed a year ago was dug up by an enthusiastic gardener. Provide a few raised beds or a small garden plot.”
Before hiring a landscaper or local tree removal services, ask for recommendations and check for online reviews. Note that depending on the scope of work or the size of the tree, you’re looking at spending anywhere between $50 and $1,600! You’re already investing hundreds of thousands in the property — you want to make every dollar count.
Remember, though, some repairs and replacements are a must. Leap Property Management reminds us that “Major appliances keep your house comfortable and need to be replaced quickly when they malfunction. So be prepared for a quick replacement when the time comes.” Things like replacing the water heater, furnace, and appliances are all essential but costly. So before investing in a rental property, be sure you’re prepared for sudden repair or replacement costs.
Evaluating your financial situation, how comfortable you are with repairs and replacement costs, plus the connections you have for reliable contractors will make a difference in your future as a landlord. If you can find a balance you can work with, then you’ve got a great chance to invest in a rental property and reap the rewards.
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