Getting started with your first investment property? Although this is a great way to diversify your portfolio and make extra income each month, it’s also a big challenge with many potential pitfalls. If you go in without forethought and planning, you could wind up making costly mistakes. Here are a few tips to help you make sure you cover all your bases and manage your property well.
1. Don’t Rush In
Deciding to invest in a rental property is exciting, but don’t let your excitement cloud your judgment. Make sure you thoroughly research what being a landlord requires before you commit to buying a property. Ask yourself hard questions: Do you have the business skills to be a landlord? Are you organized and able to commit to a schedule? Can you handle difficult conversations?
Moreover, you should be sure you have the financial stability to take on the job. This investment carries risks, just like any other. What will you do if you lose rental income? Do you have the money to manage your rental mortgage along with other expenses in that situation? If not, will you sell the property or find other ways to earn income? Thinking through these scenarios ensures you’re truly prepared to be a landlord.
2. Upgrade Your Property
Once you do buy a property, look at it critically and see what can be improved. Any upgrades you make will make your property that much more attractive to renters. Look for changes that will directly impact tenants’ quality of life. For example, installing an air cleaner will improve air quality and reduce allergens and irritants. This project usually costs $506 – $3,660 for installation, plus replacing filters will cost an additional $20 – $200 annually. Being able to say, “You’ll feel healthier here” to potential tenants will be a great investment.
You should also make any upgrades that will affect tenant safety, such as replacing a failing heating system. Addressing this before tenants move in is the best call; you don’t want to be stuck in a time crunch with tenants who have no heat in the dead of winter. Have your building thoroughly inspected and address any issues that come up (an inspection typically costs between $275 and $400).
3. Focus on Marketing
Great marketing pays off when it comes to rental properties. You might be tempted to put a brief listing with a few photos you’ve taken up on your local rental sites and leave it at that. However, this doesn’t do anything to make your home stand out, and, as a result, you might miss out on catching renters’ eyes.
Instead, go the extra mile with your listings. Hire a professional real estate photographer to catch your property’s best features. List all amenities and take some time to include the details you think make your property special. An excellent listing will draw in renters and help you secure rental income as quickly as possible.
4. Establish Positive Tenant Relationships
Once you have renters, it’s important to make sure you develop a positive relationship with them. The relationship between tenant and landlord can easily be respectful and mutually beneficial, but it also has the potential to be hostile and bad for both parties. The most important thing you can do as a landlord is listen to you tenants’ needs. This doesn’t mean you have to give in to their every whim, but you should take their feedback seriously and make the changes that you can.
Tenants who know their voices are heard are more likely to respect the property, pay their rent on time, and renew their lease. This means you have more secure income and fewer issues to fix between renters. Do everything in your power to foster a great relationship with your tenants, and it will pay off in the long run.
Follow these tips, and you’ll be able to manage your rental investment with confidence and ease. There will be challenges along the way, but as long as you focus on moves that protect your investment, you’ll be able to overcome them. Your property is waiting: Are you ready? Photo Credit: Pixabay