15 Tips For First-Time Property Renting
Want to rent property to home buyers?
Believe it or not, property renting is a booming business. If you’re interested in renting property to people, then it’s important to do your research, especially when doing this for the first time.
In this article, we’ll cover 15 helpful tips for buying your first rental property:
Stop and Think
“First and foremost, you’ll need to decide if whether or not being a landlord is best for you,” says Julie Chandler, a project manager at Ratedwriting and Revieweal. “If you’re a handy person in the home, then you might do well as a landlord. However, don’t jump into the occupation if you don’t have enough experience in real estate.”
Know How To Leverage
Leverage the right mortgage, so that you can save money, and use that extra cash to go towards repairs. Plus, educate your buyers about mortgages, so that they’re comfortable with what they want to buy.
Pay Off Debt
The last thing you want is to invest in rental property while still battling personal debt. So, if you have any of the following:
- Unpaid credit card bills
- Unpaid medical bills
- Student loans
- Personal loans, etc.
…then don’t invest.
Invest In The Right Location
Every home needs some attractions that can bring people in. In other words, if your ideal home is located near a school, restaurants, movie theaters, etc., then that’s good. Plus, you’ll need to know the crime rates (if any) of the desired location, including means of public transportation, the job market, etc.
Make Your Down Payment
A 20% down payment (at best) is what needs to be made when buying a home to rent out. You can get this amount from financing at a bank through a personal loan.
Choose: Buy Or Finance
Whether you buy or finance a rental property depends on how you’ll plan to invest in it. While buying with cash is great, financing the property gives you a greater return of investment (ROI). But again, all this is dependent on your rental property goals.
Choose A Single-Family Home
Single-family homes are ideal for novice real estate investors. In fact, there’s less wear and tear in these homes, thus needing less maintenance on your part.
Focus On ROI
As mentioned, financing gives you a greater ROI. Therefore, your cap rate should be as least 7%. Establish your cap rate by studying the area, as well as the average pricings of homes in the area.
Avoid High Interest Rates
High-interest rates on an investment property can eat into your monthly profits from renting a property. So, make sure that you lower your low mortgage payment.
Have An Effective Marketing Strategy
As a landlord, you’ll need to market your first home in a way that will get home buyers to come to you. So, before buying a rental property, be sure to plan your marketing strategy first. In this way, you’ll know how to speak to buyers and rent to them something great.
Buy Based On Familiarity
Familiar with a place? Or a city? Or a national landscape? Then that’s great for business! If you’re familiar with a certain place, neighborhood, etc. then you can showcase that when renting your property to people.
Have A Clear Written Lease
Your lease should be clear and detailed so that you can meet tenants’ expectations. In your lease, list the following:
- Typical payment due dates
- Lease termination costs
- Tenants’ cleaning requirements
- Pet restrictions, etc.
- Get Landlord Insurance
“Landlord insurance is essential to have, when being a landlord,” says Joseph Jefferson, a business writer at Academadvisor and Write My Paper. “This type of insurance not only protects your real estate investments, but it also gives you coverage on lost rental income, property damage, and liability protection.”
Fixer-upper homes are for more experienced landlords. In your case, since you’re new to the game, it’s best to avoid these homes. Otherwise, you’ll be stuck trying to fix a home that’s riddled with problems, thus eating your investment.
Know Your Rights
Finally, you need to know your legal obligations as a landlord. Local and state landlord-tenant laws exist for a reason. From lease requirements to tenants’ rights, to eviction rules, you’ll need to know your rights, as well as that of others so that legal conflicts are avoided.
Buying a rental property for the first time is common. However, it’s also common to make mistakes along the way. We hope that this guide will help you be wise about your first-time investment in the real estate industry.
Emily Henry is a writer and editor at Student Writing Services and Subjecto. She is also a contributing writer for Best Essay Writing Services. As a marketing specialist, she helps companies improve their marketing strategies and concepts.