There are many rules of thumb and just good business practices for rental real estate investing. Here are 10 ideas that can save you a lot of time, money and effort with your rental property investments.
Think like a business owner or business buyer instead of a home owner or home buyer. Find out about the rental market for housing in the area where you’re thinking of buying. Inspect the property and inquire with local government offices about laws regarding rental properties in the area, thus knowing before you purchase, whether the area, the property of local laws will make successful investing difficult.Checkout new tax law affects rental real estate owners for more info.
Prepare to make improvements on the property. Think ahead. Build the costs and time into your plan. If you don’t, getting a unit ready to rent could take much longer and be more costly than you expect.
Expect to pay more in points and interest for an income property than for a home you live in. Lenders consider a loan on income property to be riskier, so they charge higher interest and/or points.
Pre-screen tenants carefully. Don’t rent to just anyone who’ll give you a deposit. You might have potential renters fill out an application. You can check their credit, employment and rental history if you want to.
Stick by the rules you give your tenants. For example, if you say, “No pets”, don’t make exceptions. Don’t invite trouble by letting tenants ignore rules.
Choose rental properties that are close to home. Don’t spend your profits traveling to manage your property or paying for long-distance repairs.
Don’t be afraid to make a low-ball offer to the seller. Remember, you must think like a business owner.
Look at “competitors” near the property you’re investigating. Do they have lower rents, vacancies or amenities like washers and dryers in the units?
Insure yourself and your property, not only against fires and hurricanes-protect yourself against potential lawsuits from tenants, tenant’s guests, etc.