Rental Property Investment Strategy: Steps for Individuals Who Want to Break Away from the Traditional Work Place and Work for Themselves
Have you had it with the 9 to 5 grind? Do you find yourself frustrated with your traditional job? Are you ready to quit helping others with their dreams and ready to focus on the dreams that you have? If you have answered “yes” to any of these questions, it is likely that you are ready to step into the rental property business.
In order to succeed in this endeavor, you need a rental property investment strategy. The lack of such a strategy is sure to lead to failure; however, a comprehensive strategy for investing in rental property will be the key to success.
Step #1: Focus on Your Finances
In most instances, you will be required to obtain financing when purchasing a rental property. It is essential that you understand that most lenders in today’s market are hesitant to assist in the financing of rental property. For this reason, you will need to take a few steps.
First, you will need to save up for a down payment. This should be – at the minimum – 20% of the total cost of the property.
More is better.
To protect themselves, many lenders may require six months of the mortgage payment that they outline with you. This is a means of protection for the lender in case of an unexpected vacancy or any type of emergency repairs that must be handled.
Once you have a solid understanding of how much you will need and how much you have, it is time to save. Once the monies are in your account, move on to step 2.
Step #2: Determine the Rental Market You Want to Invest In
There are many types of rental markets. There are residences, commercial investments, industrial, and multi-housing units.
Research all markets and determine which you are most comfortable with.
Remember, you are not just investing for yourself. The property you rent out will be occupied by tenants.
Evaluate the neighborhood and opportunities to determine if it is an area where tenants will be attracted and will benefit from living/working/doing business.
If your property has a high cash flow, it will likely carry high risk. Are you willing to opt for this in the beginning, or, would you rather for moderate cash flow with low risk?
These are important considerations to make.
Step #3: Determine the Property Quality
Once you have discovered a rental property that you have an interest in purchasing, it is time to determine its overall quality. This is a critical step.
The main areas to evaluate include :
- age of the property
- obvious repairs needed
- repairs needed in the next few years
- overall outdoor aesthetic or “curb appeal”
- unique qualities and characteristics
This is where you figure out if the investment will provide you with a return or more debt.
Step #4: Know Your Rights and the Laws
Once you have determined which property you will invest in, it is time to learn all about your rights as a landlord, as well as your legal obligations. This will help to ensure that you are conducting business in such a way that you and your investment are protected, 100%.
Step #5: Hire a Property Manager
When it comes to a rental property investment strategy, a property manager is an absolute must. This professional will handle all of your responsibilities. These include:
- tenant complaints
- repairs
- collecting deposits and rent
- tenant screening
- evictions
This will help to ensure that you are in line with your legal obligations, your rights are being upheld, the rights of your tenants are being upheld, and that your business runs as smoothly as possible.
We Can Help
We here at Pioneer Property Management are highly trained management professionals in the real estate business. We offer the best rates and the best service to our clients.
To achieve the highest level of success in your business endeavor, we work in partnership with you and your tenants. Best of all, we can offer you assistance with your rental property investment strategy – from start to finish.
