Investing in rental properties doesn’t require a ton of experience in the field of real estate. Instead, it requires some careful investigation into specific properties. First-time investors should do a lot of research about specific properties, be conscientious about controlling their costs, and follow some smart practices in their tenant selection process. Even if you’ve had little or no experience in generating revenue through rental income, you may find this type of investment to be preferable to others. Here are some things to consider about buying rental properties.
Owner Occupied Buildings Offer Savings and Convenience
Multifamily buildings are a fantastic way to supplement your income while saving money on your living expenses. The rent that you get from your tenants can help to pay for your ongoing costs such as a mortgage, property taxes, and utilities. If you need to show a unit to a prospective renter or respond to a maintenance request, you don’t have to go anywhere out of your way.
A Building in a Desirable Area Can Get Outstanding Rent
Many areas have a growing demand for affordable rental units. If you purchase a building in a sought-after locale, you get excellent rents that are still affordable to renters. Do a market study of what rental units in a specific region go for. If you charge rents that are too high, you may have trouble renting them and people may struggle to pay on time after move-in. If you set them too low, you’ll be leaving money on the table. You want to strike a good balance that accounts for units’ location, size, and features.
Avoiding Turnover Can Help You Avoid Unnecessary Losses
A multifamily building with just a few units can become burdensome to operate if you have a prolonged vacancy. Setting your rental rates smartly can prevent this, but it’s also important to choose the best possible tenants. Rather than just accepting a tenant who seems responsible, you need to go through an application process and background check prior to acceptance. You need to verify applicants’ income, check their credit, and get at least a couple prior landlord references. When you screen tenants, it’s important that you are fully compliant with state and federal fair housing law.
When you look at what’s on the market, you need to establish what criteria are most important to you. Look for a property that checks all of your criteria to ensure that you’ll be happy with your investment and you’ll get the returns that you anticipated.