The real estate industry is one of the most non-volatile industries and a good option for those who wish to set up a passive income, as it tends to pay off much better than other modes of investment. The profits from these properties depend on various factors that contribute to the property value.
The average rent in Boston is over $3500! On the North Shore, the average rent goes down to a few thousand depending on the area. However, there can be a change in this amount depending on the property, location and area amenities. Most experts suggest that if the property provides $100 to $150 in profits after handling all the expenses, it is worth investing in.
However, stepping into the rental property business requires a lot more than just purchasing the property and should be consider before jumping in with both feet. As a property owner, you will be responsible for taking care of everything from property maintenance, tenant screening, general documentation, insurance and legal requirements.
Rental Property Investment: How do I Start?
The exact strategy for rental property investment may vary for each situation, but you can keep the following factors in mind as a general rule of thumb.
Work with a Realtor Experienced with Income Properties & Real Estate Investing
Not all real estate agents and brokers are equal in the investing arena. Some realtors specialize in single family homes, while others work exclusively with investment real estate. A realtor highly experienced in investment real estate will help educate you on the process and requirements, help secure financing and much more. They will also be able to help you get the most for your money while maximizing your portfolio strategy. Finding the right deals, is half the battle. Once you start purchasing the right properties, your real estate investment portfolio can grow fast and you will be on the path to creating and income stream that will not only pay for itself but also provide income for living expenses and much more.
Join a Local Club and Start Networking
A great way to get professional exposure is to join a local club and start networking there. These investor groups and clubs can help you understand the workings, requirements, and shortcomings of the industry while making new contacts and learning the industry from a local level. Secondly, these investor’s clubs can help you reach out to newer people and opportunities with ease while possibly finding deals and opportunities that would normally be out of reach. Most aspiring rental property investors can find a helping hand in the industry and launch their careers more easily. You can at least expect professionals to provide insight and knowledge on the best modes of action, and avoid unpleasant experiences.
Choose a Market and a Niche
Most first-time property investors aren’t aware of the versatility in the industry. The opportunities in the market are virtually limitless. Moreover, the best place to invest is much more important than choosing an investment amount for your next investment venture. Therefore, it is wise to take a look at all your options before making a decision.
The location of your property will play the most essential part in determining the returns, investments, costs, and all other integral elements in your investment. However, we suggest you consider some key pointers to keep in mind before choosing a market and a niche that excites you.
- Average property acquisition costs
- Average rental rates in the area
- Communication methods
- Commute and market research costs
- Distance of the property
- Stability and diversity in the market
- Team availability
We understand that investors can pool their money anywhere they like and do not necessarily have to live in the same area. However, it is something that matters for first-time rental property investors. There are several extended benefits of this simple practice.
For instance, investors can easily screen potential renters and choose the best ones. Similarly, staying aware of the rental property area makes it easier to target a specific audience, reap most profits and have a good investment result in the end.
When running a rental property business, it is very important to understand financing as it is one of the most crucial hurdles when acquiring properties. Interestingly, several investors await a good rental property project to fund it. They wish to do this for the profits by all means; however, understanding financing can benefit both parties. Real estate investment teams have access to several external funding sources. This has made it easier for rental property investors to spend their money and earn profits from it.
Alternative funding sources may cost you more interest (typically three to four times higher than others). Nonetheless, it is not a bad price to pay considering that you have access to additional finances, which will open larger investment opportunities that were otherwise out of reach. Not only is getting the money easier but is a lot faster compared to traditional banking and loan sources.
In addition, we suggest you secure financing as a first step when investing in property. By having the funding in place prior to searching and bidding on properties, you will have a leg up on competition that may not be in the same position for a quick close which can be very attractive for sellers.
Learn to Manage the Property
You need to know how to take care of your properties with or without the help of a professional. These professionals can guide you in the beginning, but you will do most of the work yourself in the long run. You need to start by assessing the systems that you need to install to keep the property well maintained. Following are some common concerns that you need to handle in this regard.
- Choosing between becoming a landlord yourself, or hiring a property manager
- The process for finding and selecting rental property tenants
- The maintenance process and who does it
The answers to these simple questions will determine how you take care of your property. There is no right way to choose as it varies for each situation. However, you can consult with a professional or figure out on your own what works best for you.
As your portfolio grows, you may want to consider hiring a property management service to manage your properties. There are several benefits to having a property manager. They will manage every aspect of your property freeing you up to do other things. From maintenance to finding tenants and collecting rent, a property manager will make your life so much easier and help you get the most of your property while also helping to protect your assets and business.
Owning rental property can be very profitable if you know how to handle them. Focus on taking care of these properties efficiently and they will reap profits for you annually while building large amounts of equity you can leverage to purchase more properties and secure a better future.
Need Help Getting Started?
Contact us today to start a conversation about getting started in real estate investing. Our agents specialize in income properties and can help guide you every step of the way. We have access to the best properties, and we know the area better than any. Get started today!