Rental Properties 101
Are you looking for a smart, savvy way to grow your money?
One of the best investments you can make is in rental property. There are countless stories about people who found financial freedom through the passive income of real estate.
However, getting started isn’t as easy as phoning a broker, and it takes some work to get it right.
One thing that can be problematic to first-timers is that rental property can take a while to become profitable. People who are discouraged by this are the ones who haven’t done the work to calculate the long-term profits, because, while rental properties won’t bring you an immediate windfall, they will bring you reliable passive income. Having that predictable, dependable source of income is foundational to financial comfort and wealth.
Here are some tips to help you take your first steps into purchasing a rental property:
- Choose your market wisely: Consider the location of the property. Proximity to notable activities or places can really maximize the rental potential of a property, especially for airBnB. Conversely, something quiet and out of the way, preferable near beautiful nature, could also be a great “getaway” rental. Also, consider local prices and rents — where are they higher, where are they lower?
- Build up your real estate team: This doesn’t necessarily mean you should hire full-time employees; it just means that you have a few go-to professionals who can reliably get you what you need when you need it — for instance, making contact with a contractor, lender and real estate agent.
- Figure out your financing: Part of making a rental property profitable is getting a good deal on your mortgage. With historically low-interest rests, it’s an excellent time to lock in a property with very manageable monthly payments — the kind that can easily get absorbed by payments from renters.
- Start getting leads: Once you’ve established the location, your loan, and a local team, then you’re ready to find your first property. That means it’s time to start getting leads. It will be easiest to get these from your agent, but you can find them anywhere: Zillow, Trulia, etc.
- Running the numbers — it’s all about balance: Figure out how much you want to make in passive income and what you’ll have to pay to keep up the property and satisfy the mortgage and compare that to what you’ll be charging for rent. When you have these numbers in front of you, finding a good deal on a property becomes much easier because you already know what you’re looking for.
- Factor in renovations: Ensure that you know how much renovation and repair would need to take place and add that to your calculations. An excellent way to do this is to break the cost down, spread it out over time, and incorporate it into your rental price. That way, renting it out pays for everything you put into the property.
With these six steps, you’re ready to start your journey towards owning a rental property. Talking to a local real estate agent can help you considerably in this endeavor. I offer free, no-hassle, no-commitment consultation and would love to put my experience to work for you. Email me at [mail_to email=”[email protected]”][email protected][/mail_to], or call [ai_phone href=”+1.301.208.2288″]301.208.2288[/ai_phone].