With the housing market on the rise, rent rates skyrocketing, and homeownership benefits larger than ever, you may be wondering, should I have investment property? You’re not alone, and the answer is simple, YES. Yes, you should be investing in property.
Investing in property, despite the hiccup in the housing market circa 2008, is potentially the safest and most stable way to accrue wealth in contemporary society. The reason why is likely something you have heard in the past: property (and investment property) is not going anywhere. The world is not making new land (although we are losing it, looking at you Miami), so investing in property is generally regarded as a fiscally stable and responsible decision.
Not to mention, there are very lucrative tax breaks inherent in property ownership because home ownership is encouraged by the American government. The tax code is largely centered on the idea that owning land, ie owning a home, drives the economy. As a result, it offers tax incentives to those smart enough to “capitalize” on our capitalistic economy.
While we could go on, and on, and on, describing the nearly innumerable benefits of owning vs renting, the fact is we think you already know it’s the better decision. The question is how do you go about owning property? Once you have the down payment together, what do you do? What properties do you look at? How do you obtain additional properties once your primary residence is established?
TenantEvaluation understands not all average Joes want to remain average Joes, regardless of their occupation. In light of that very fact, with respect to John Locke’s age-old idiom of man’s inherent rights: life, liberty, and property, we present you with the knowledge you need to gain wealth and property no matter your day job. In fact, we preach you quit your day job! After you gain enough investment property anyway. Either way, here you go:
Professional investors routinely analyze and scrutinize dozens and dozens of properties before property (properly?) settling on one. If you choose to neglect the basics, you may very well end up with a lemon of a property, but no lemon law to protect you. Before sinking substantial funds into a money-making machine, make sure you do the following:
-Establish your metrics for success (how much return you want)
-Write down your requirements
-Assess the market using popular real estate websites like Craigslist & Zillow
-Analyze state laws for rental properties and rental applications
-Crunch the numbers!
-For ownership
-Mortgages
-Taxes
-Insurance
-Repairs
-Association Fees
-Neighborhood Fees
-Utilities
-Electricity
-Anything and EVERYTHING.
The numbers are everything it comes down to here. If you do the math, and you’re losing money, you’re losing money. It’s that simple.
When you find the right investment property with a decent return, track down a realtor who will stand by your side and educate you while taking a firm stance on price. We’re not saying a realtor who lowballs owners, mind you, but rather one who understands the market and is willing to be fair and honest while fighting for you.
Also, you will generally need financing since most don’t have $100k sitting in their bank account. While of course banks and other traditional lenders are the usual solution, don’t forget credit unions. Credit unions very often have the best (meaning lowest) interest rates available.
Once you’re in, renovate, decorate, and innovate. Make your investment property better than it was, and take pictures to prove it. Whether that means replacing the flooring, painting the walls, purchasing new appliances, or fixing that leaky showerhead, do it. You will be grateful you did, and so will your tenants.
Create the best possible rental listing. There is a tremendous variety of listing sites out there including but not limited to: Craigslist, Zillow, Trulia, MLS, etc. Take professional photographs, and remember to be detailed and NOT redundant in how you describe your property. For more information on this point, check out our previous blog, “Fuego Rental Listing Means Fire Rental Applications.”
Once the applications are flooding in, make sure you pick the right tenant. How? Tenant screening online for one. There are a ton of services that provide this, but the best is TenantEvaluation. Why? We’re free.
Why else? We offer the most comprehensive checks available on the market today by pulling from the most credible criminal, credit and rental history databases nationwide. Not to mention, we’re backed by bank-level encryption, so you have utter peace of mind along with the convenience of PAPERLESS APPLICATIONS. Everything is online.
Draw up a lease and collect the deposit. Congratulations! You’re officially a landlord and own your first investment property.
Remember, just because you have a tenant and the rent checks rolling in, doesn’t mean your job is done. Simply put, passive income is hardly passive.
You have to be willing to monitor the property and make appropriate repairs when they inevitably arise. In today’s day and age of instantaneous information, reputation truly is everything. Take care of your tenant so they will take care of your property, and live by the “scratch my back, I’ll scratch yours” mantra to govern your landlord-tenant relationship.
Some tips before move in day:
-Have two copies of the keys (for both you and the tenant)
-Request tenants to do their own move-in inspection so you don’t hear complaints later on
-Give tenant list of emergency numbers
-Make a tenant copy of the lease
Being a landlord isn’t easy. That’s why TenantEvaluation provides you with the tools and information you need to make rental property management what it should be: easy. Check our blog to learn more tips and tricks to take care of the business outside of your business, investment property management.