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Investing in rental properties will continue to make investors’ money as the main business and as a side hustle. Rental Properties will also leave some with the hot experience of getting burned. Those who educate themselves in rental properties, have realistic expectations going into it and know their risk tolerance will fare better chances of a positive outcome.
Here some tips that will provide insight into making your real estate investing experience a positive one.
- Educate yourself on The Rental Property Market– Read books, blogs, and anything you can to become educated on the subject of real estate investing. Knowledge is power. The best advice is to learn from someone else’s mistakes not your own.
- Know the market or find a Real Estate Agent who does – Knowing the rental property market in the area you wish to acquire an investment property can help to reduce questions about possible rental rates and pricing. It can assist you with knowledge about the demand for local rentals. Where is the demand coming from, is it students, retired couples, or small families? Some rental properties can have more turnover in certain areas, due to the type of renters, rental rate, and the type of property. Having a good real estate agent who has experience, and access to additional information in an area can make a huge difference in the rental property selection process.
- Save your money – When times are good, and the rental property is rented, save your positive cash flow. When the times are not so good, such as vacancies, issues with maintenance, bad appliances, or having to repaint between tenants, that saved cash will come in handy. It can help with additional cash outlays. A rental property is a business unto itself. Manage the business well, like any other business, for the days when circumstances change.
- Hire a tenant rep – In the residential real estate world, this is often a property management company or a Real Estate Agent who has experience in residential tenant/landlord negotiations. These entities have resources to qualify tenants for income and perform top-notch screening for criminal, Megan’s list, and credit. I know of a great property management company in Corona who can do this for you, can you guess?
- Know your risk tolerance – Rental Property investment carries certain risks associated with it. Evaluate your income, savings, and your financial stability. Things are not always peachy. Be ready and be tolerant, especially if you choose a challenging rental property. Assess your current financial position and what your risk tolerance might be.
- Stick to your strategy – If you have a strategy for acquiring a rental property based on certain financial factors, risk tolerance, and other criteria, try not to break your strategy, especially due to a bidding war, and your need to win. Stay focused and stick to your strategy. Do not overextend yourself or your budget.
- Overestimate expenses – As with any business, always overestimate what you think your expenses might be. This will help you later in the event expenses increase for certain events. Rental Properties can have unexpected costs over time. Houses get old, appliances get old, and there is always minor wear and tear on flooring and other areas. Also, note that you may need to fix a few things between tenant, such as floor cleaning and paint. Sometimes security deposits can help with unwanted repairs.
- Look at many properties – Rental Property Deals are great, but there could be many more out there. Look at many rental properties, and don’t just focus on the first couple that appears good. Take your time, do your research and look at as many rental properties as you can. Evaluate each one for criteria mentioned in this article and any more you can come up with that will help you make the best decision in building a rental property portfolio.
If you have any questions about acquiring rental properties in Corona and the Inland Empire, or if you have a need to have your property management. We are an experienced property management with flat rate pricing, and a great system for ensuring your property is protected and rented. call us at 951-520-0058