In order to make money as the owner of a rental property, step one is to choose the right property to invest in. Luckily, evaluating a rental home is easier than you might think. That’s because local realtors typically offer a search feature that makes it possible to find properties in your area. The search features will often allow you to narrow down properties based on price, size, region, and other key variables to consider.
Furthermore, you’ll usually be able to make an appointment with a realtor to see a property that’s listed on their site. It’s important to know that picking the right property means choosing something that will appreciate in value over time and allows you to profit from having tenants. Not only that, but the region that you choose to invest in is more important than ever. This is due to the fact that the pandemic has impacted the country’s economy in a highly uneven fashion.
Here’s what you need to know for successful real estate investing as a landlord:
- Consider rent prices in the area - Your rent prices will need to fit in with the rent prices of other properties in the area. Therefore, you’ll need to make sure that it will be possible to make a profit while renting out the property for a value that’s similar to comparable properties in the region. In addition, many experts feel that it’s best to use the 1% rule. This means charging approximately 1% of a property’s value in rent each month.
- Consider the value of the property for real estate investing - If you lose tenants suddenly, you’ll be stuck paying all of the expenses associated with the maintenance of your rental property. Therefore, you need a backup plan. Always make sure that you invest in areas where the real estate prices show signs of steadily increasing. Therefore, if you ever need to sell your property, you still have a good chance of making a profit!
- Determine if it’s an equity investment or a cash flow investment - In general, a good equity real investment is a property that is likely to appreciate value over time. However, cash flow investments make it possible to earn an income off of the property every month while you’re still the owner! These are the properties that will be ideal for landlords. That’s because they’re designed in a way that makes it easy to partition the space in a way that will create individual apartments for paying tenants.
These are some of the most important tips that landlords should keep in mind to ensure that they have an effective cash flow investment: Good cash flow investments typically make it easy to divide the property into several small sections, which can be equipped with their own kitchen(s) and bathroom(s). You should choose properties that offer relatively thick walls. This will help to ensure that noise from one apartment doesn’t seriously impact others. Avoid properties that have thin walls or other architecture that makes partitioning difficult.
If you’re unsure whether or not a property makes a good investment, you can always get in touch with us. We’ll be happy to assist you right away!