Many real estate investors, or those thinking about getting into real estate investing, have the idea that money (in the form of rent) simply flows into their bank account as they sit on the beach. That is a nice image but the reality is that real estate investing requires good decisions and continuous monitoring of the investment. Here are eight tips to help you stay focused:
Set goals and remember them. You need to know why you are in the rental market and what you want to accomplish financially.
Expand your thinking. Consider smaller markets. Before buying, know the profiles of likely tenants and what can be done to the property to add value, and thus increase rent.
Manage your finances. Know your income and expenses. It will help you get loans and, subsequently, buy more property. Don't forget to include taxes, insurance, maintenance, management, utilities and the reserves for major repairs.
Look for real estate with upside. Properties near schools, expanding retail or trendy points of interest, or local transportation tend to appreciate.
Know your rental market and its property ratings. Areas rated A through F, and they all sell and rent for different rates. If you don't want to be a property babysitter, avoid the areas with the lesser ratings. Areas with F ratings often have the most violent crimes in the neighborhood.
Renovate the kitchen and bathrooms. Quality granite in the kitchen could save you resurfacing costs, and bring in an extra rent.
Don't be lured by low interest rates. Make sure your home has enough value to get the returns you want when you eventually sell the property.
Screen the tenants. Use the SnapRoof tools to screen tenants, access background reports, and interview references. Look for people with a good job, some savings, and pay their bills.