Investing in Your First Rental Property? Take Note of These Helpful Tips
Investment property – it’s a phrase you’re familiar with that comes with more benefits than just the extra stream of income. For starters, you become the boss since you set the rules, how much you’ll charge, and how you’ll maintain the property. From a money standpoint, you’ll have a bank loan to purchase the property, but this is actually a positive. Read More to Find Out!
Photo by Pixabay
Investment property – it’s a phrase you’re familiar with that comes with more benefits than just the extra stream of income. For starters, you become the boss since you set the rules, how much you’ll charge, and how you’ll maintain the property. From a money standpoint, you’ll have a bank loan to purchase the property, but this is actually a positive. How?
The longer you own the property, the more money from the mortgage goes to principal as opposed to interest, eating away at your loan debt. In addition, the loan plus the amount you invested is eligible for property appreciation, making it a winning investment. Oh, and there are tax write-offs as well, such as mortgage interest, insurance, and even maintenance.
Evergreen Cleaning Company offers dependable, natural cleaning services for your home or business. When it’s time to spruce up your investment property to woo renters, call (657) 203-3393 or email us at info@evergreencleaningco.com.
In the meantime, these tips can help you plan and prepare for success with your investment property.
Create Your Own Rental Business
An important first step in establishing your new rental business is determining whether an LLC is right for you. LLCs provide personal liability protection and allow your business to take advantage of better taxation options. Another important step to consider is knowing the rental market you will be purchasing in. One of the best ways to do that is networking with real estate agents to determine the best fit for you. Establishing this social network can end up providing you with new rental leads and also help you price your rentals appropriately.
Know Your Expenses
Investment properties sometimes fail, but the reason is often due to failure to estimate expenses. You’ll need to identify fixed expenses such as utilities, property taxes, and insurance, as well as variable expenses like repairs, improvements, and vacancy. An easy way to paint a more accurate picture is by asking a property manager — and maybe consider hiring one while you’re at it. A property manager takes the stress out of owning a rental property and handles tasks you might not be familiar with or want to do, like collecting rent, screening tenants, and taking care of maintenance and repairs.
Even if you don’t hire a property manager, there is one worthwhile investment you should consider: hiring a professional housekeeping service like Evergreen Cleaning Company. Along with giving your property a thorough deep cleaning right after you close on your purchase, working with a professional cleaning service to sanitize your property between renters has a great ROI. For one thing, working with pros ensures your rental home will be cleaned as quickly as possible between visitors, allowing you to book more guests. Plus, you’ll receive high ratings regarding cleanliness on rental sites, which will attract more renters (especially those with children). Utilizing a professional housekeeping service is only a modest expense, but it will have a huge impact on your rental property business.
Keep in Mind the Features Tenants Want to See
In the same way there were certain features and amenities you wanted in and around your home, the same applies to your future tenants. As you browse properties, put yourself in their shoes. Take into consideration the location — is it near grocery stores, restaurants, hospitals, pharmacies, entertainment, and transportation? What is the parking situation? Is the area safe? Are there good school districts? Is it pet-friendly? Will appliances be included?
Again, a top consideration is how clean the rental is. Let’s face it, nobody wants to inherit dirt when they move into a rental. It’s in your best interests to hire Evergreen Cleaning Company to stay on top of things.
Make Updates to Add ‘Wow’ Factor
Purchasing an investment property that doubles as a fixer-upper isn’t recommended if you want to avoid overpaying and a general headache, but this doesn’t mean you shouldn’t make some upgrades. Dumpsters.com suggests making updates and renovations as well, especially if it is an older property or in need of a face lift.
You don’t have to spend a ton to make changes that impress tenants — give the walls a fresh coat of paint in an inviting color (including the front door, shutters, house numbers, and mailbox); replace, paint, or stain cabinet doors; or add new hardware. Install wood flooring as opposed to carpet that is easily stained, and don’t forget to add some curb appeal with basic landscaping.
Purchasing an investment property is a big step. Thankfully, it can be a financially sound step if you know what to expect. These tips will give you an idea of how it works, and if it’s the right step for you, leaving you to make the next move.