For many would-be rental property investors, the process of acquiring a new rental home can be daunting. There are several things to consider before making the purchase, and it’s important to do your research to ensure you’re getting a good deal. However, with some careful planning, acquiring a new rental investment property can be a relatively easy process. Here are some tips for investors looking to add to their portfolios.
Do your homework
Purchasing a property can be both an exciting and intimidating process. However, with a little bit of research and due diligence, you’ll be on your way to making a smart decision about the property you wish to purchase. Be sure to check out the local market and evaluate the pricing of properties similar to the one you’re considering. This will help you in coming up with a reasonable offer. You can also look up tax rates and other property-related expenses that may impact your bottom line. While you may not have been looking for another thing to add to your to-do list, by doing some basic research, you can make your best offer on the property, knowing you’ve done your homework before signing on the dotted line.
If you aren’t sure where to begin looking at properties, a professional property management company can help. With their intimate knowledge of the local market, property managers can provide a rental analysis, make suggestions on repairs the property might need, and more. If you’re already working with a sales agent, don’t worry – a professional property manager and a sales agent can work together to ensure you’re making a sound decision before finalizing your purchase.
Explore your financing options
It pays to know your financing options when looking to purchase a rental property. It’s not as simple as stopping by the bank and asking for money. If you’re well qualified and can make a sizeable down payment, your best route could be traditional mortgages with long-term plans and low-interest rates. But, if you’re unable to qualify for a conventional loan, there are also hard money loans and private loans, which may be easier to qualify for but come with shorter repayment terms and higher interest rates. Considering these various financing options is key when deciding on buying new investments.
Figure out your return on investment (ROI)
When it comes to acquiring investment properties, cash flow and return on investment are among the most important things in your evaluation process. Not only is it crucial to look at the amount of money you’ll have leftover each month after all the bills are paid, but also the percentage of your initial investment that will be recouped over time. This is one area where you’ll have to weigh the pros and cons - sure, a property with high cash flow is obviously attractive, but if its return on investment is low, it might not be worthwhile. Wise investors will also consider the potential for future appreciation - doing the math today could make all the difference in profits down the road.
Factor in maintenance and repair costs.
If you’ve done your financial homework and are ready to purchase, don’t forget to factor in the cost of maintenance and repairs. It can be easy to ignore these potential expenses if the property has an attractive price tag, but making sure your investment property is well maintained should be your main priority. Not only will setting aside some money for repairs help keep your rental home in great condition, but it’ll also aid in ensuring you’re not hit with huge costs down the road. In addition, proper upkeep from the beginning will pay off - you’ll be able to start cashing in on passive income sooner rather than later!
Work with a professional property management company
Managing rental investment properties is not for the faint of heart - it can be a time-consuming, complicated venture that many landlords dread. After all, building a real estate empire requires sound decision-making, a deep understanding of landlord-tenant law, and attention to detail. But don’t worry - if this all sounds like more than you bargained for, you can bring in reinforcements! Professional property management companies are available to help shoulder the responsibility. Professional management companies are experienced in dealing with just about any issue that can affect a rental property. They can also keep track of finances related to the property, handle maintenance issues on your behalf, advertise, screen tenants, and more. Working with professionals will relieve the stresses brought on by being a traditional landlord and make it much easier for owners to focus on other aspects of their lives.
So there you have it! If you’re considering getting into the rental investment property market, these are a few things you’ll want to keep in mind. Be sure to do your research, get financing in order, consider all costs associated with owning a rental property, and evaluate the return on investment. With careful planning and execution, acquiring a rental property can bring in some passive income and be a great way to build wealth over time.
As a leading property management firm in the Cape Fear region, Sweyer Property Management recommends that property owners strongly consider working with a trusted and experienced property management company. Whether it pertains to the eviction process or another area of handling your investment properties, we want to make sure property owners and investors understand the relationship they are entering into when choosing to work with a property management firm.
If you have investment properties and do not use a professional management company, we hope you consider doing so. The experts at Sweyer Property Management will be happy to provide you with a free rental analysis or, if you prefer, give us a call at 910-239-1338.
Sweyer Property Management is a full-service professional property management company specializing in all aspects of rental management. If you’re an investor or property owner looking to learn more about our services and what a professional property manager can do for you, reach out to us today at 910.256.3031 or via our website. Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland, and Hampstead areas while maintaining an excellent Google+ rating for customer service.
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