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Here’s 10 Tips For Successful Buying Strategies For Rental Properties

by

Richard Sherland

If you are considering buying rental property. Congratulations. You are now among the tens of thousands of people each year who consider buying investment real estate. But are you ready for the next step to actually buy rental property? In spite of what you may have heard elsewhere, there is a lot to know and it is a lot of work. But that doesn’t mean it isn’t worth the effort..Owning rental property can be very rewarding financially and otherwise.

Buying rental property that will produce a profit each year is not very difficult, but maintaining a 25% return on your investment or selling the property in 20 years for a large profit will take some much effort on your part.

While the credit crunch remains to be a matter of great concern and the stock markets are crashing, the real estate market is also under stress. Investing now takes a great deal of care during these times of financial stress.

First of all no matter how bad the recession looks and how bad the market seems, remember that real estate market keeps on fluctuating and will bounce back most unexpectedly. So do not hesitate to take the risk and invest! . There are several issues that you have to handle before and after investing in the rental properties. Here are a few tips for buying rental property.

1. Prepare for the commitment

Investing in rental property is more than an investment it’s a business. You have to be willing and able to commit the time and resources necessary to run your business successfully. .

2. Find Low maintenance buildings, good Location ,Buildings that Comply with Zoning and Fire Codes and that the Neighborhood is stable or improving .

3. Cash flow. Consider how much rent you can collect each month, and how much will be left over after mortgage payments, maintenance costs, and other expenses. Appreciation. Rental property owners can’t rely only on appreciation to make their investments profitable, but it certainly can help.

4. Evaluate the market

Like any other business, rentals are subject to the basic forces of supply and demand. If apartments are in short supply, you probably won’t have trouble filling yours. When you are trying to generate positive cash flow from a rental property, vacancies are perhaps your greatest enemy. They cost you money and generate no income in return.

5. Becoming successful at buying rental property rental owner requires that you do whatever it takes to rent your property, keep your tenants happy and maintain your property so it can be easily rented year after year. That means you must actively seek renters to fill your vacancies, respond to your tenants needs and take the time to make repairs that will last and even increase your property value. Anyone can pick up a roller and paint a room so it looks pretty. But not everyone can fix a leaking pipe or replace a broken windowpane. Make sure you know what you are doing, have someone that can help you or be prepared to pay for house repairs.

6. Buy an existing Building with a positive cash flow.. Cash cows are hard to come by, but if you take over a property that has existing tenants and a positive cash flow, you cannot go wrong as long as the building is in fair condition. Sometimes older members of the population, tired of the rental game, will give up their properties. Check out the property and the sales price to determine which homes on the market may be a good deal. Have an inspector make sure the building follows all building codes and that it is in good shape before you purchase.

7. Property managers. Once you buy a rental property , you need to find someone (if you are not going to do it) to be your property manager. This person will be on call for any problems that may arise in your building. If you live out of town, a property manager is crucial. If you do not want to hire a property manager, at lease formulate a list of reliable handymen (plumbers, roofers, carpenters, find a company) that you can call on should any problems arise.

8. Get good tenants. Have your agent advertise your rental properties at a price where you can make money on your investment. When you have your applicants, make sure you examine their credit, job history, references, and if possible, you should meet them. If you choose tenants that destroy your property or those that do not pay rent, you are not “gaining” with your investment. Always, always get a security deposit in addition to–or in replacement of–a last month’s rent. Put any and all stipulations in the lease (no smoking, no pets, etc.) and make sure the tenants understand the terms and sign where appropriate on the lease.

Choose the Tenants Carefully:You don’t want to spend all your time attending to problematic tenants so it is always important to find the right tenants for your property. While renting the property, it is always crucial for a landlord to ensure the credibility of the tenants. Make sure to ask for references and run credit checks before you decide to go into an agreement. Always have all the contact information of your tenants and discuss all the issues of the transaction before you go into an agreement about the deal. Read more about tenant screening

9. Real Estate Evaluation: Before you make your final decision to buy a property, make sure you take a professionals opinion about it. The best thing is to have the property inspected and evaluated for its real estate value. Make sure that the professional is honest with you about the evaluation and hence pick a professional whom you can trust.

10. Low maintenance buildings. Avoid cedar shake roofs, and wooden sided buildings. Look beyond current expenses to how much maintenance the building will need. Low maintenance means less headaches and more profits.

Take some time to read articles on buying rental property and becoming a landlord before you move ahead and buy a rental property. Participate in on line forums that discuss the pros and cons of buying rental property. Talk to other rental property owners to hear their thoughts on being a landlord. Be sure to ask what it is like to rent to students, how they deal with vacancies, and what other issues they have renting in a college community. Investment real estate can be a worthwhile investment if you are well prepared to face any challenges that may come along.

Richard Dover is the owner of

Economy Property Management

.

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Here’s 10 Tips For Successful Buying Strategies For Rental Properties
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