Owning family housing rentals can be a rewarding and profitable business. However, it is necessary to look carefully for the type of property you wish to buy. If you are a prospective landlord, you should look at the properties’ features, including the amenities, proximity to useful locations, and the type of renter that the property is likely to attract.
Eduard Shapshovich, an experienced family housing landlord, explains the top five tips that prospective landlords can use when looking for new properties.
1. Search for the Right Location
Looking for the right location can be one of the most challenging aspects of buying a new rental property. It is a good idea to vet the new neighborhood thoroughly. Even if the properties are less expensive, an area with many vacant properties is a bad idea. If there are that many vacant properties, there is probably a good reason people don’t want to live there.
Proximity to colleges, supermarkets, parks, schools, and shopping areas can be positive points in a property’s favor. However, if you do not want to attract a particular type of renter, such as college students, you will need to choose your location accordingly. Getting to know the neighborhood can also give you a good idea about how much you should be charging for rent.
2. Attract the Tenants You Want
When you are looking for a new property to rent, you will want to be clear about the types of tenants you want to attract. However, you will need to be careful about advertising your property in accordance with fair housing laws.
Make a list of the types of tenants you want, and then sublist the amenities that would attract them. For example, if you are looking for young families, a close distance to supermarkets and schools would be a great idea. If you are looking for urban professionals, look for close proximity to upscale shopping areas, restaurants, and large employers.
Attracting the right types of tenants can come down to where you advertise. Most people are now accustomed to looking for rental listings on Craigslist or other local boards. In addition, national listing sites like apartments.com may be a good idea if you are looking to attract professionals from different parts of the country.
Facebook is another good place to advertise a property, and you will be able to enhance your listing using photos. No matter where you list, good photos of your unfurnished or carefully staged unit will help you sell the property to the right kind of renter.
3. Financing Your Property
The two types of loans that you can use to fund a rental property are conventional bank loans and home equity loans. A conventional bank loan like a residential mortgage may be easy to get if you already have other properties. You will probably need a down payment of around 30 percent to get this type of loan as a landlord. Conventional loans depend on your personal credit history and credit score. Lenders also look into borrowers’ assets and income.
Home equity loans are taken out on your primary residence. These loans have variable interest rates and can be more convenient than traditional loans.
4. Making a Profit
Making a profit on a rental property can be a balancing act. You will need to charge enough to keep your property in good repair, pay all of your expenses like taxes and insurance, and at the same time charge a low enough price to attract the right tenants to your home. Setting the right rental price starts with looking at similar units in your area. Find out whether your unit has more or fewer amenities than other local competitors and set your price accordingly.
5. Managing Your Property
Landlords need to take responsibility for all maintenance on their properties. They need to keep their units in good repair and regularly inspect their properties to ensure that the tenant is taking good care of their home. If a tenant is overly destructive, it may be possible to take action against them.
Being a landlord can be a 24/7 enterprise. Find that you are not willing to be woken up at two o’clock in the morning because a tenant has a water leak in the basement. You may be happier doing business with a property management company. While a property management company’s services can be expensive, it is often preferable to having your time interrupted multiple times each week. Property management companies do everything from collecting the rent to maintaining your property and finding new tenants for vacant units.
Investing in Rental Property
Residential rental property can provide an excellent stream of passive income. However, some pitfalls can trap the unwary landlord and cost a great deal of money. Finding the right tenants and setting the rent appropriately are two ways to protect yourself against future problems.
Eduard Shapshovich understands the pressures on today’s rental property owners. The pandemic has caused many tenants unable to afford their rent, and new rules have prevented evictions. As a result, many landlords are in financial trouble. Following these rules for a new rental property can help landlords regain their profits while providing a quality, safe living space for local families.