When you’re looking into creating your own rental business, there are several things you should consider. Whether you’re just now considering purchasing a rental property or are new to rental property management, here are a few tips to follow, courtesy of David’s Home Loan.
Buying your first rental property
No matter where or when you decide to invest in rental property, your first will always be special.
- For vacation rentals, there are plenty of online resources to get you started, including a list of the top places to own a rental.
- For residential rentals, make sure you research the area and get an idea of market conditions.
- Staging is still important with rentals! The property should exude comfort and should make people want to see themselves living there.
- Consider making upgrades that reduce the amount of time and money you spend on maintaining your investment property.
Making money as a rental owner
The point of buying an investment property and starting a rental business is to bring in extra income. But how do you make the most out of it?
Invest in an area that has a high return on investment. This means you need to learn the market in your area.
- It’s difficult to know all the expenses your property will incur, but building a budget that is as accurate as possible is important.
- Calculate how much monthly rent you will charge and subtract expenses, and make sure you are generating a cash flow from that transaction.
Being a good landlord 101
Taking care of your property from a monetary perspective is only part of the gig.
- Make sure you check the local, state, and federal laws for rental properties before anyone moves in, and make the requisite renovations on your property.
- There are several desirable qualities in a landlord, including availability and flexibility. Your tenants have to be able to reach you!
- Don’t let problems — or infestations — go untended. For instance, if you’re having problems with mice, take care of it quickly and professionally by searching Angi for “rat exterminator near me” and hiring based on reviews.
- You also need to be honest and organized!
Administrative tasks to be aware of
You’re going to have to take care of a few administrative things as your business starts out and as it continues to grow.
- Registering your rental business as a limited liability company (LLC) is a good first step, along with creating a business plan.
- In some areas, you’ll also need to register your property as a residential rental.
- As your business grows to the point where you have employees, multiple buildings, or multiple cities, you should invest in Cloud Accounting — not just to save time but to provide a more accurate picture of your business.
Managing rental properties can be challenging, but with proper planning and by staying on top of paperwork and repairs, it can also be extremely lucrative. So stick to the above-mentioned strategies and don’t forget to have fun with your new investment!