There are many types of real estate investing, but the most popular and perhaps, the simplest among them is through property rentals, hence becoming a landlord. You’ll be called by that name, a landlord to a tenant. While it was identified to be a simple type of real estate investing, becoming successful in renting a property is not that easy. There are certainly lots of problems to be encountered along the way. Lots of landlords have become very stressed by their rental property. The good news is that there are lots of ways to avoid stress.
Dean Graziosi wrote an article in HuffPost awesome tips for a low stress first rental property investment for you to become a better landlord. Read the article and find out more.
5 Tips for a Low Stress First Rental Property Investment
You don’t have to be the investor in the photo. Sure, doing anything for the first time can be a little stressful. And, it’s definitely a major investment to buy your first rental home. But, you really can make it happen without going into stress overload. Here are my top 5 tips to enjoy a successful and low stress first rental property investment.
Tip #1: Advice is OK, but Do Your Own Research
Take courses, read investment books, go to a seminar, or any other learning process that helps you to gain confidence to make decisions. I suggest that any books, courses or seminars be about how to select locations, value properties and evaluate the rental market. Your success will be based on your due diligence and most of all buying right in the right area.
Your first rental property investment is best done in your area of residence, where you know what’s going on economically. You want to know that the economy will support today’s decision into the future, as this isn’t a short term strategy. Understand who the major employers are, what drives people to move in or move away, and if things look good into the near future.
Tip #2: Don’t Just Rely on Real Estate Agents
Sure, now and then you can work with a real estate agent who handles foreclosures and get a good deal. Remember though that these will be “listed” foreclosures on the MLS, Multiple Listing Service. You and all of your competitor investors have access to the same information, so competition will likely drive up your cost of acquisition.
If you do your own marketing and locate motivated sellers, you have a greater chance of negotiation a good deal. Another approach is to work with an experienced real estate wholesaler. They are investors too, but they are experts and finding great deals that they can flip to rental property buyers at a below-market value price. Just check their references out and be sure they do know what they’re doing.
Tip #3: Know What Will Rent and for How Much
Check with property managers who handle single family homes. Go to the classifieds and check out what homes similar to the one you’re considering are renting for. Are the owners offering incentives like free months? This is usually a sign of a soft rental market or heavy competition, so you may want to try another neighborhood or property type.
Call on ads, drive around, talk to landlords as if you’re a tenant. The most important thing for you to know before the next tip is what you can reasonably and conservatively expect for rental income and low vacancy. See full post here…
Managing a rental property is indeed stressful at some point. There are lots of problematic tenants out there. It is always much better to be cautious as to who are your tenants are, doing some background checks etc. If done right, property rentals is a profitable business, but you must become a better landlord. Christopher Middleton identified the best tips in becoming a landlord in his article at The Telegraph.
Top 10 Tips on How to Become a Landlord
Before diving into the buy-to-let market, it’s important to get into the rental mentality. Here are 10 tips to help you on your way.
1. Learn to listen
Meet lettings agents and other landlords and hear what they have to say. Consider joining the National Landlords Association.
2. Do your homework
Read Successful Property Letting (RightWay £9.99), by David Lawrenson, creator of the LettingFocus.com website.
Also Vicki Wusche’s book Property For The Next Generation (Amazon, £10.23).
3. Take aim
Decide (with advice from lettings agents) what size of property to go for, and what kind of tenants you will be targeting (students, families, young professionals, company lets).
4. Be prepared to travel
Properties outside London are cheaper to buy and offer a better rate of return on your investment.
5. Shop around
For a buy-to-let mortgage offering a reasonable rate of interest (3.3-3.5 per cent) plus equally reasonable arrangement fee (£1,400 is low, £2,000 is high).
Also for reliable lettings agents, to manage the property (do they belong to a professional body, such as the Association of Residential Letting Agents?)
6. Saving for what?
How much profit do you want to generate per month? £100? £200? What is that money for, immediate spending or long-term pension top-up?
7. What’s the worst?
Work out how you will manage if your tenants lose their job, or if they leave the bath running and flood the house.
Knowing the techniques to become a better landlord helps a lot in managing your stress with your rental property investment. Before starting, it is very important to get into the rental mentality first. Do your research and get expert advice. Leave no stones unturned before getting into rental property investment. Brian Davis posted in his article at BiggerPockets the smartest ways to start your property rentals investment.
5 Smart Ways to Start Investing in Rentals Later in Life
1. Leverage (and build!) your network.
Think that 23-year-old rascal has a network like yours? Fuhget about it.
Take advantage of your superior network and double down on building an even stronger one.
Who do you know in the real estate industry? In the mortgage industry? In the construction and contracting industries?
Who do you know who has more money than they know what to do with and is looking for a project to invest in?
The electrician in your Friday poker group can refer you to trustworthy and affordable general contractors and handymen. The real estate agent in your bridge club may not service the area where you’re looking to invest, but she can refer you to someone who can.
Don’t stop at friends of friends. Join local real estate investing Facebook groups. Participate in our local real estate investing forums on BiggerPockets. Sign up with local wholesalers, turnkey providers, and other off-market sellers in your area.
Start assembling your dream team. After all, real estate investing is a team sport, and you have several more decades’ worth of contacts to draw on to fill out your roster!
2. Capitalize on your existing capital.
After being employed for several decades, you should have far more money set aside than some 23-year-old just out of college who’s scraping by on their entry-level income.
That extra capital is a competitive advantage!
Maybe you can afford to make cash offers to drive a harder negotiation and avoid financing fees. Or maybe you can afford a higher down payment to avoid mortgage insurance and having to resort to tricks like owner-occupied financing or relying on seller concessions for closing costs.
You may decide that you want to finance your rentals even though you can afford to buy in cash for tax or leverage reasons. But having more money at your disposal is a huge advantage over the young punks out there.
Use it to your advantage to negotiate hard, get the best possible financing, and move faster on deals than your competitors can.
3. Take another look at house hacking.
“Forget it, Brian! I don’t want to live in some trashy duplex!”
First of all, there are plenty of upscale multifamily dwellings out there. Don’t discount them just because your experiences with small multifamily properties have been less than thrilling.
But even if you are committed to living in a single-family home, there are many ways to house hack.
First, you could buy a home with an in-law suite and convert it to an income suite.
Or how about a detached casita?
Could you add an apartment over the garage? In the basement? Something with a separate entrance of course, so you don’t have to mingle with the riffraff.
If you have a large garage space, could you rent it out as storage space?
My partner Deni Supplee is in her mid-50s, and she took a unique angle on house hacking. Her children had all left the nest, but she and her husband weren’t ready to downsize from their large suburban home just yet. What did they do? They brought in another child!
Through a foreign exchange student placement service, they welcomed a 15-year-old Chinese exchange student named Alex into their home. They fell in love with him, and he’s become a member of their family.
And the placement service pays the majority of their mortgage every month. Learn more here…
Investing in rental property is definitely a profitable form of investment that is very simple and straightforward. But it requires a good amount of patience and dedication to make it profitable and not the other way around, reducing stress.
If you need to raise capital to start rental property business and want to sell your old house, we at Dependable Homebuyers can help you sell your house fast. Visit our website https://www.dependablehomebuyers.com to get started.
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