Real estate is one of the sure-fire ways to build wealth. It doesn’t mean everyone who invests in real estate will become rich, but the pathway has been successfully traversed by millions of people over the years. And if you want to give yourself the best chance to be successful financially, there’s no better place to focus than on real estate.
Having said all of that, owning rental properties can be challenging. In order to do it successfully, you’ll need to arm yourselves with knowledge and strategies that allow you to thrive. In this article, we’ll explore some of the best tips for new rental property owners to enjoy greater success.
- Do Your Research
A lot of people think success as a rental property owner or landlord comes with finding the perfect tenant or learning how to squeeze every last dollar of income out of a property, but that’s not true. Success is rooted in finding the right properties. And in order to do that, you need to be serious about doing your research and due diligence.
Before you even start looking for properties, it’s crucial to understand the local rental market. This includes trends in rental prices, vacancy rates, and the types of properties in demand. Additionally, consider the demographics of potential tenants in the area.
Once you do start looking for properties, location is the number one factor to consider. After that, property condition and potential come into play. Ideally, you find properties that have a suppressed value that can be instantly enhanced with some simple, low-cost upgrades.
- Hire a Property Manager
The next step is to hire a property manager. Yes, you could technically act as your own property manager and “save” a few bucks up front, but it’s just not worth the hassle in most situations.
A good property manager will remove a lot of the painstaking, frustrating, and menial tasks of being a landlord from your plate and allow you to focus your time and energy on other things. They can handle everything from screening tenants and drafting lease agreements to scheduling property maintenance and even initiating the eviction process when needed.
The key is to hire a local expert. For example, if you’re in the Houston, Texas market, don’t hire a company based out of New York City. Hire a Houston property management company that has “boots” on the ground and understands the market.
Once you partner up with a property manager, take the first month to really train them on your priorities, preferences, do’s and don’ts. You want to ensure they’re operating in a way that aligns with your business objectives. A good property manager will be able to work with you on these things.
- Be Organized and Meticulous
Successful property managers are organized and on top of things. From taxes and budgeting to insurance and cash flow, they know their numbers. And the only way to know your numbers is to be meticulous with how you organize your records.
Track all income and expenses related to your rental property. This not only helps with tax planning but also provides valuable insights into the property’s financial performance. Create a comprehensive budget that covers regular expenses like maintenance, insurance, property management fees, and property taxes. (And don’t forget to account for long-term financial goals, such as property improvements or expansion.)
- Scale With Purpose
You might be perfectly satisfied with owning one rental property and calling it a day. But if you’re like most people, once you get your first taste of positive cash flow on one rental property, you start dreaming about adding more into your portfolio. The key here is to scale with purpose.
The last thing you want to do is just start stacking as many properties into your portfolio as you can. (Just ask anyone who got caught holding the bag in the 2008 crisis.) Adding properties is good, but only when the individual properties make sense. Do as much research when buying your fifteenth property as you did when you bought your first.
Find Success With Real Estate
If you’re looking for a way to set yourself up for the future, owning rental properties is certainly a great way to give yourself a strong foundation and footing. Apply the tips from this article and you’ll find yourself in a position to be very successful in the coming years. Good luck!