Building your rental property empire starts with the most basic of investments – buying your first rental property. If you do it right the first time, the revenues from that investment should enable you to start looking for your next rental property, and then the next, and so on. Before you know it, you have a profitable rental property empire that you made yourself and can live off of through your retirement years and leave a sound financial legacy for your heirs. To help you attain such potential, here is a short guide to rental property investing.
Before you buy, you need to determine what your needs are, what kind of property would be best for you to invest in, what you can afford, and many other factors to ensure you make a sound investment. You need to know what the market conditions are where you are looking to buy, average rents and occupancy rates, neighborhood quality, local economic conditions, and what kind of return you want from your investment. When you have a sound idea of market conditions, your finances, and potential return on investment, you more easily can focus on rental properties most likely to meet your criteria.
If you are looking to get rich fast in the rental property market, you are going to be in for a big disappointment. Investing in rental properties requires a long-term view and a long-term investment to be successful. That means you have to set realistic investment goals from your rental property. So long as you have chosen wisely when you buy and maintain your property, you stand a good chance of making a good deal of money over the long run, while also building your equity.
You don’t have to come up with all the money to buy your first rental property. Because you are investing in a business, and as long as your personal credit score is good, you should be able to find reasonable financing in advance from a bank or other lender. It can be advantageous to finance your investment properties, at least initially, so that your tenants can help you pay the mortgage balance down. You can also initially use your cash flow to pay down your balance faster. Once your mortgage is paid in full, you can reap the full cash flow from your rental property investment.
Now that you have your financing in place, have chosen your preferred markets and neighborhoods, and have realistic investment goals, you can shop around for the best property. When you find a property you like, you need to investigate it to ensure its taxes are paid in full, you don’t have any local zoning or other issues that might complicate matters, it has a clear title, and a strong history of resale performance and value. Make sure the property and location provide the opportunity for higher rents and lower property values so you can maximize your cash flow.
Once you have your rental property, you still need to manage it, but that doesn’t mean you have to be the on-site landlord. In many cases, it’s preferable to hire a property manager to handle the daily tasks of dealing with tenants, repairs, vendors, and other daily tasks of managing your property. In the meantime, you have more free time to plan your rental property investing strategy.
If this sounds a little daunting to you, but you still want to get involved in rental property investing, then you may be interested in turnkey rental property investing. At JWB, we find property opportunities, complete the renovations, secure and manage tenants, all for our investors. What this means is you have the opportunity to own rental property investments, build passive income and equity. Click here to learn more!