If you have little or no knowledge of the real estate market, it is strongly recommended that you seek the advice of experienced investors. So, if you have a friend, family member, co-worker or neighbor who has been successful through real estate investments, do not hesitate to contact us and explain your situation to us. First-time investors whose social circles are behind real estate gurus are urged to contact knowledgeable real estate investment firms. Seasoned professionals will be able to educate you on the basics of location research, the principles of profitable real estate, and a host of other important topics. For example, if you’ve been wondering, “Is it a good time to invest in real estate?”, they’ll be more than happy to address this question in detail.
To help ensure the success of your first rental property investment, you’ll need to look for properties in profitable locations. After all, it should come as no surprise that rentals in areas with high demand for housing tend to be more profitable than rentals in areas where demand for housing is virtually non-existent. With this in mind, never commit to buying a rental property without researching its location first.
In the course of your research, be sure to take a close look at an area’s population size, local economy, property values, and rental rates. All this information should give you a clear picture of the demand for an area and how much you can benefit from investing in a local rental. Therefore, no matter how enamored you are with a property, you should never forego proper location research.
Investing in a rental property that is riddled with outstanding problems can be extremely frustrating and financially ruinous, especially if you don’t realize those problems until after the sale has been finalized. In order to avoid such an unfortunate outcome, insist that any rental you are considering purchasing be thoroughly inspected by a certified professional. This will ensure that you know exactly what you will be getting if you go ahead with a purchase.
Also, the benefits of a formal property inspection don’t end there. If an inspection reveals problems that you, and possibly even the seller, were not aware of, you will be in a good position to request a price reduction that reflects the cost of fixing those problems. Also, depending on the scale of certain issues and the financial burden of addressing them, an inspection can show you that a property is a reckless use of your resources.
No matter how nice your first rental is or how profitable the area you’re in is, tenants who can’t pay their rent, or don’t want to pay their rent, can dramatically decrease your monthly earnings. To limit your chances of ending up with such tenants, you’ll need to screen everyone who submits a rental application. Among other things, a good selection process involves taking a close look at the applicant’s employment situation, confirming that he or she earns enough to comfortably pay rent, and contacting any references you provide. If you don’t have time to personally screen each applicant, consider working with a dedicated screening service.
It’s easy to see why so many rental property investors are determined to generate the highest possible ROI. Considering how much capital is invested in an average rental property, it’s only natural that they would strive for favorable returns. While success is never a guarantee in such endeavors, there are numerous steps investors can take to minimize their chances of disappointment. So, if you’re determined to get the most out of your first rental property, put the tips discussed above into practice.