The desire to invest in a good rental property is perfectly understandable. After all, a well-kept property in an area with ample demand can be among the smartest investments you ever make. Unfortunately, far too many fledgling investors fall victim to rookie mistakes that hamper any success their investments stand to bring.When looking at investment properties for sale, there are a multitude of various factors and intricacies you’ll need to know before even thinking about opening your wallet. If you’re looking to distinguish yourself from this type of investor, take the time to get educated and make a point of avoiding the following missteps.
Overpaying for Properties
Unsurprisingly, overpaying for your first rental property can result in considerable regret. Given how expensive most rentals are, being taken advantage of by a seller is the absolute last thing you want. Fortunately, there are several easy ways to avoid shelling out more than a property is truly worth.
For starters, make sure to thoroughly research local property values and rental rates. In addition to providing you with a solid understanding of how much you can expect to pay for rentals in the area, your research will show you how much rental income you can expect to rake in each month. Should you notice that properties that are similar to the one you’ve taken an interest in have much lower asking prices, you have every right to request that the seller reduce their price accordingly. Some sellers assume that potential buyers won’t put forth the time and effort to carry out location research, and far too often, they’re proven right.
You should also insist on having any property you’re giving serious thought to purchasing professionally inspected. A meticulous inspection from a certified professional will ensure that you’re made aware of any outstanding issues with a property before deciding whether or not to proceed with a deal. Furthermore, a professional inspection may be a prerequisite for having a property insured. Once you have the results of the inspection, you’ll be able to seek out contractor estimates for any problems the inspector has identified and request a price reduction that reflects the cost of necessary repairs and/or renovations.
A highly-rated real estate investment company can also help you avoid overpaying for a property. In addition to educating you on the tenets of a profitable rental property, seasoned professionals will show you how to invest 100k in real estate and get the most for your money.
Neglecting to Screen Rental Applicants
Although you may find the screening process cumbersome, failing to carry it out only stands to hurt you. Regardless of how positively a potential tenant presents themselves over the phone or in-person, they may turn out to be a problematic renter – and if rent isn’t being paid, a unit isn’t making you any money. Furthermore, depending on where you’re based, you may have an exceedingly difficult time evicting someone for nonpayment of rent.
As such, every rental applicant who comes your way should be thoroughly screened. This entails confirming that they make enough income to comfortably afford rent, having a look at their credit, checking their criminal background and contacting references. If you simply can’t be bothered to carry out the screening process on your own, reach out to a dependable screening service.
Making Yourself Unreachable to Tenants
Friendly and effective communication with tenants is an absolute must for a successful rental property owner. So, if you develop a habit of ignoring calls, text messages, emails and other communiques from tenants, you’re liable to experience a host of negative consequences.
For one thing, poor communication is conducive to poor renter retention, which can prove extremely damaging to your financial bottom line. Secondly, if tenants are displeased with your communication style – or lack thereof – many of them are likely to make their displeasure known online, causing damage to your professional reputation.
In the interest of avoiding such consequences, make sure to provide every tenant with an email address and phone number at which you can be reached during normal business hours, as well as an emergency number to call in response to after-hours maintenance mishaps. Furthermore, make a point of responding to all messages within the same business day they’re received.
Getting your hands on a desirable rental property can prove tremendously beneficial to your finances. However, this shouldn’t be taken to mean that every rental property is guaranteed to generate massive returns. In fact, some are liable to cost you a lot more money than they ever stood to make you. While there’s no surefire way to guarantee one’s success as a rental property owner, there are numerous steps you can take to increase your odds of turning a profit. In the interest of making your first rental property a worthwhile investment, take care to avoid the blunders outlined above.