How to Start Your Own Rental Property Business

Who doesn’t want to make money from real estate? There’s a huge demand for housing across the United States, which means there’s a ton of money to be made on real estate. And let’s be honest: real estate just as a certain sex appeal to it.

Rental properties can yield high returns on investment, and they’re also a great way to dramatically increase your wealth.Starting a rental property business is easier than you think, so long as you follow these simple steps. With careful planning and hard work, you could be making lots of money on an investment property, whether you’re renting it for residential or commercial use.

Evaluate the Market

Before you purchase a rental property, it’s important that you carefully evaluate the market where your property-of-interest is located in. Be careful about purchasing a property in a neighborhood where there are low property values, and in which there seems to be no future up-turn.

When you buy a property in one of these neighborhoods, you might find it difficult to find tenants unless you set rent prices very low—in which case you might not be able to make enough money to make the property very profitable. If you’re going to buy a property in a low-value neighborhood, try to pick one that might see redevelopment within ten years.

Learn how to tell if there’s a legitimate money-making opportunity on a property, so you don’t wind up investing in a property that has minimal returns.

Get Financing

If you’re going to buy a rental property, you’ll probably want to choose an investment property loan over a traditional mortgage loan or personal loan. An investment property loan is usually a short-term loan (paid off within 1 to 5 years), which is good because you’ll obtain full equity in the property faster, and thus, make money faster. The only catch is that the interest is high and your monthly mortgage payments will also be high. But that’s the benefit of having tenants paying rent. You can put your rent toward paying off the loan. Once the loan is paid off, you’ll get to pocket all the rent in the future.

But you still need to budget carefully. There’s a good chance that you won’t find tenants for your first month or two, which means you’ll have to pay the mortgage payment entirely with your own funds. That’s why you want to be careful about where you buy your property. You’re going to need to gain enough rent money to help you cover most or all of the cost of the monthly mortgage payment. You shouldn’t buy a property where you won’t possibly be able to get sufficient rent to cover the loan cost. That’s why it’s important to evaluate the market and know your budget.

Prepare for Landlord Duties

Once you rent out the property to tenants, you become a landlord. It’s important that you do ample research on how to become a landlord, because it isn’t easy. There’s a lot that you’ll have to take care of, from maintenance requests to finding the right tenants.

Maintenance requests are time-consuming. As the property owner, you’ll be in charge of hiring contractors to fix plumbing, HVAC, and pest issues. You’ll need to respond to these maintenance requests in prompt fashion, or else you’ll be dealing with angry tenants who are legally able to withhold rent until the maintenance is taken care of. If you make tenants too unhappy, they might not decide to renew a lease, and the vacancy could cost you money.

It’s a lot of work being a landlord, and if you’re trying to maintain a passive income, you might consider hiring a property management company. For a fee, these companies will handle maintenance requests for you, collect rent, and find good tenants.

Always Be Looking for Tenants

If you have many units to fill, you might constantly have to be advertising to prospective tenants. Finding good tenants can be difficult, especially in markets where there’s little demand or markets where there’s a lot of housing competition. Rely on digital marketing techniques to advertise. Advertise on social media, or post listings to a rental listing website. And always remember to use a tenant screening service to ensure that you’re giving a lease to tenants who have no criminal record or prior evictions.

Are you ready to start making money? In order to get your rental property business started, just carefully evaluate the market, get a solid loan, prepare yourself for the landlord life, and get ready to fish for tenants. In no time, you’ll be making a huge supplemental income, and you’ll drastically increase your overall wealth.