There’s a lot of potential for building wealth and setting up financial freedom when you invest in real estate. There’s also a lot of potential for liability and risk. If you’re a new investor, congratulations on taking an important step towards meeting and exceeding your real estate goals. We’re here to help you avoid a lot of the costly mistakes that even experienced investors make.
This first-timer’s guide will help you get started now that you own some rental property and you’re ready to start collecting rent.
Price your Property Correctly and Prepare it for the Market
Before you start looking for tenants and signing leases, you need to ensure your home is ready for the rental market. If it needs a little work, get started on that right away. Have it cleaned thoroughly and professionally, and remove any debris or personal items that were left behind by former owners or tenants. Check every system and function to make sure it all works. Replace light bulbs that are burned out, make sure the windows lock, and replace the air filter. Take care of any repairs, and then consider making some cosmetic updates that aren’t too expensive and will help you attract the best tenants for the most rent. You might consider a fresh coat of paint, new appliances, or updated ceiling fans.
Next, make sure you’re pricing your property right. Everyone wants to earn as much as possible in rent. But, you have to be competitive and price your property according to what the market will bear. Conduct a market analysis so you know what other homes like yours are renting for in the area. Hopefully, you’ve consulted with a property manager before buying your house. If you haven’t, do so now so you can get some accurate pricing data.
Marketing and Screening for your Rental Property
Once you’re ready to find a great tenant, make sure you’re placing an ad that’s engaging, accurate, and full of great photos. Place your ad on all the online rental sites that prospective tenants are using, including Zillow, Trulia, HotPads, and Rentals.com. Make sure you including information on rental amount, size, and location. When tenants get in touch, be responsive. Schedule showings and answer questions.
You need an application that’s compliant with all state and federal fair housing laws. Be careful when you’re screening; you have to screen every application consistently, and you need to be protective of your applicants’ data and financial information. When you’re screening, check these important things:
- Nationwide eviction and criminal check
- Employment and income verification
- Credit check
- Rental history check
Many investors and landlords neglect to talk to former landlords, but this is important. You can ask if rent was paid on time, if there was any property damage left behind, and if that landlord would rent to the tenant again.
Maintaining your Home and Enforcing your Lease
With a lease signed and a tenant in place, you will be responsible now for collecting rent, responding to routine and emergency maintenance issues, and making sure your tenants is doing everything you expect.
Smart investors work with professional property managers so they don’t have to worry about the stresses and expenses of finding the right tenant, executing a strong lease, and taking care of the property throughout the lease term. When you have an experienced property management team working for you, there won’t be any reason to worry about making mistakes or falling out of compliance. You’ll have access to their expertise as well as their tools and resources. Professional management companies work with reliable maintenance vendors, respond to emergencies in the middle of the night, and take care of any tenant disputes or problems.
The best thing you can do as a new investor is hire a smart, capable property management company to help you earn more and spend less on your investment. We can help. Contact us at Assured Management for more information.