Have you been contemplating buying an investment property and becoming a landlord?
If you have done your homework on all of the demands that come with rental home ownership and still feel that this is a wise decision for you, then the next four to five months (summer into fall) is the right time to buy and get your first tenants into your rental home.
Why? As the weather deteriorates by the end of the fall, and winter weather approaches, the housing markets will fall as well, because no one wants to move in the dead of winter. As fall progresses, sellers will be eager to close on the sale of their homes before the onset of winter weather. All of this means, buyers like you will be more likely to be able to strike a deal and negotiate with sellers on the price of your new rental home.
In addition, parents with school-age children will be eager to settle into their new home and neighborhood before the first day of school, so families will be deep into their new-home search during summer months.
The first and most important step to take is to team up with an experienced real estate agent. Take advantage of the current state of the market and contact your real estate agent now to begin your search for the perfect rental home opportunities.
As your Realtor will advise you, when purchasing rental property, it is crucial to explore all the options available to you. By this, we mean, not all rental properties are the same. There are single-family homes, condos and townhouses; there are apartment complexes and multi-plexes; and even commercial investment properties to consider. So it's important to devise a strategy ahead of time, taking into account how much money you want to invest at the outset, as well as how much work you want to take on, and whether you'll be tackling this adventure alone or with the help of others.
For the first-time real estate landlord/property investor, we always recommend residential single-family dwellings as a smart start to allow new landlords to "get their feet wet." They will require much less work than a commercial or multi-unit property for your first foray into the world of landlordship.
Your Realtor can also help you identify the most ideal area or neighborhood in which to focus your search, as location is key when you want to find good tenants to rent your new property. Highly populated areas where rents are typically on the high end of the spectrum are the perfect place to start your search. You'll want to avoid more rural areas where the pool of potential renters is much smaller.
You'll also want to do some research on crime rates in the area, since most renters will be looking for a safe neighborhood to rent in. Finally, the ultimate rental home will also be close to good schools, shopping, hospitals, public transportation and other such attractive amenities.
As far as features go, the more bedrooms and bathrooms the home has, the better. The more the property has to offer, the more interest you are likely to get from potential renters. In addition, when the time comes that you or your family decide to sell off the rental property, you have already secured one that will attract interested landlords like yourself in the future.
Next, it's time to think about the financials. Before you embark on your rental property search, consult a lender and secure your capital. A professional financial planner or lender can assess whether you have enough assets to handle the fluctuations that come with property management. There will always be ups and downs when it comes to owning rental property.
Once you feel confident that you have enough capital to sustain a rental property investment, we advise that you consider consulting a property management service that can assist you in maintaining your investment. If the last thing you want is to be seeking out, purchasing and installing a water heater in your rental property on a Sunday evening, you can contract with a professional management company to handle emergencies like that for you. Be prepared ahead of time -- your real estate agent will likely have a relationship with a property management firm that they can refer you to, that they have worked with before and can confidently recommend.
Lastly, you may want to consider consulting with an attorney and an accountant. An attorney can help you draft a lease agreement for you and your tenants, as well as help handle any disagreements that may arise between landlord and tenant. The accountant can help educate you on all the tax ramifications and incentives of rental property investment.
Having a strong support team in place can help transform the business of managing a rental property from a headache into a real, profit-making enterprise.
And remember -- at the end of the day, allow your Realtor to help provide you with a full, realistic understanding of the investment buying process. Your primary objective should be to become part of a team that locates the most suitable property, in the most ideal location, with the most potential for profit.
So, to be successful in this venture, contact your real estate agent today!