Starting a rental property business is no easy endeavor; however, it is a very rewarding one – especially if you invest in income-producing properties. If you are an individual that is seeking to achieve long-term-based equity in real estate, the rental business is for you! This industry allows you to invest in one or multiple properties in order to produce a regular, potentially lucrative income.
By purchasing rental property, you have the capability of instantly providing a boost to your investment portfolio. While highly rewarding – both in terms of work and income – real estate has the ability to be potentially daunting for the new investor – this is especially true now that many people have transitioned to the work-at-home environment.
Have no fear, we are here! In this guide, you will learn how to start up a rental business from the comfort of your home!
Start with Research
If you want to start an at-home rental business, you must initiate the process by conducting thorough research.
This is the point where you should learn about the various types of properties that you may rent out to tenants, the types of investment strategies that you may engage in as a property owner, the policies, procedures, and laws that pertain to rentals, how to determine if a market is “good” in terms of investment, and the tax rules associated with the industry.
The more knowledge that you possess, the more successful you will be in your new home business.
Choose the Type
The next component to starting an at-home rental business is to determine what type of rentals you want to invest in. In most basic terms, there are long-term properties such as single-family homes and short-term properties, such as Airbnb properties.
Additionally, you may want to focus on single-family units or multi-housing units. Perhaps you would rather focus on residential rentals or maybe you want to zoom in on commercial rentals – the choice is yours! In real estate, your choice is referred to as your “niche”.
Before committing to your choice, make certain that you know as much as possible about your niche. If you want to succeed, continuous learning and research is a necessity.
Now that you have done your research and have decided on your niche, it is time to move on to the financing aspect. That is, how will you purchase the investment property? Will you choose to pay cash? Do you need to obtain a mortgage?
If you want to start experiencing profits quickly, you will want to opt for buying with cash. On the short-term, obtaining a mortgage will result in shorter, initial profits; however, your profits will – eventually – be higher.
One of the good things about using a mortgage is that the rent monies that you receive may be used to actually pay the mortgage. This means you lose less money in the beginning of your investment, but it also means you will be paying higher interest.
There are many different types of mortgages that you may use to purchase rental property. Examples include 203K loans, portfolio lenders, and even loans from the Federal Housing Administration.
By now, you are well on your way to starting a rental property business from home. Now, you must start searching for the types of properties that you are interested in investing. You must research the markets in the areas where you are interested in buying. This includes analyzing the cities, the neighborhoods, the economy, the crime, and the access to education and recreation. All of these components have a direct impact on your ability to make a profit in a given location.
If just one component is off, you may find yourself stuck with a poor investment. The good news is, you can do most of your searches for investment properties online and never even leave your home.
Of course, once you discover an area that does look appealing to you, you will need to go out into the field and physically research it to ensure that it is ideal to your needs.
In most cases, your investments will be long-term, so you will want to take your time in conducting property searches and researching the markets that you have an interest in.
Create a Business Plan
Now that you have performed all of the other steps in this guide, it is time to start creating the business plan for your rental business. In short, you must start by composing both a vision and a mission statement.
I know you may find that step a little odd, but the truth of the matter is, this is a business just like any other business; therefore, you must treat it like a business. Once you have the vision and mission statement outlined, it is time to put down your income goals.
You must start looking at your business as a “company” – even though you are running it and working it from home.
You must put together a team. This group of individuals should help with screening tenants, maintenance, rent collection, and all of the other aspects that go hand in hand with a rental property business. The best way to create your “team” is to hire a property management company. We will go more into this a bit later in this guide, but these companies have the capability of running all aspects of your business.
In the long run, your business team will prove to provide a high level of structure and will be highly conducive to your overall level of success.
Create a Marketing Plan and Put it Into Action
The next step to creating your at-home rental property business is to create a marketing plan and actually put it immediately into action. As a landlord, you must attract tenants. In doing so, you will create your cash flow.
To succeed in this endeavor, you will need to market that which you have to offer. There are several unique methods of marketing that are popular in the real estate market today.
Examples of these include creating a website or blog, establishing pages on social media platforms, in the local newspaper or other forms of print, through property management companies, through realtors, direct mail, and email campaigns.
Many business owners that specialize in real estate use a variety of all of these methods. The important thing is, get the word out.
Register the Business
While advertising for your first tenants, you should engage in the process of registering your business. This will provide a sense of formality to your company. All this entails is listing your rental property business with various types of agencies in order to gain a certain level of business status. It is often referred to as a “small business registration”.
When taking this step, you will need to determine if your company will be a sole proprietorship, a type of partnership, or an LLC.
Before taking this step, it is advised that you sort through each of these business types and decide which one best matches your company. That way, upon registering, you will know exactly how to register and the process will go smoothly.
Preparing the Home Office
Now, since you are working at home, you will not have to rent out a building or have any of the overhead associated with that, but you will need to designate a certain area of your home as the “office” for your business.
You may consult with other home business owners and/or research this task online. Essentially, you should pay special attention to the color scheme that you use, the layout, how you organize the room, the lighting that you place within the room, the equipment that you will need, and the overall ergonomics.
You must feel productive, safe, and work in an environment that will lend to your overall success.
Hire a Property Manager
When starting a rental business from home, you should hire a property manager. You may choose an individual or a company that specializes in property management.
The good news is, we here at Pioneer Property Management have an entire team that is standing by and waiting to assist you in achieving the highest level of success! Not only can we help you get your at-home business up and rolling, we can help with most of the tasks that have been outlined in this guide.
In addition to that, we specialize in tenant screening and selection, property maintenance, rental analysis, we market and advertise your properties, do tours, collect security deposits, rent monies, offer 24/7 emergency-based services, lease enforcement services, do vendor hiring, financial reporting, lease renewals, paperwork, ensure your compliance with all local, state, and federal agencies, and more!
By starting out with us, you will end up experiencing all of the success that you have dreamed about, and more! We specialize in creating rental property and real estate businesses that will succeed in today’s market. For more information, contact us today at: 720-839-7482