When an investor purchases a home and turns it into an income-generating property, he or she is said to be in the rental property business. If you’re interested in becoming a rental property business owner, here are a couple of things that you should know before jumping in. Read this guide to turn your property into a successful rental business.
What are the benefits of owning a rental property business?
In 2019, approximately 43 million households in the United States were occupied by renters. Since then, the demand for rental homes has steadily increased, putting property owners at a major advantage.
There are several reasons why owning a rental property is beneficial. One of which is that it provides landlords with a reliable source of income. Another is that it offers property owners a sense of security. Although investing in real estate comes with risks, it is certainly considered “safer” than other investments due to its tangible nature.
Here are some of the perks of owning a rental property:
#1 Source of passive income
Owning a rental property means that you can generate income with very little effort. As a landlord, you will benefit from receiving recurring income without having to lift a finger. This is especially true when you hire an excellent property management company to handle the day-to-day demands of property management. This is why rental properties are an attractive option for investors who are looking for financial security.
Before purchasing a rental property, be sure to determine whether or not you’ll be generating a profit. In some cases, landlords jump into the real estate market without going through the numbers. Consider working with a real estate agent to help you ascertain whether you’ll be making consistent income from a rental property.
#2 It puts your property to use
Some people inherit properties that they don’t want to sell, but they don’t want them to go to waste, either. If you’ve found yourself with a vacant property, you may be wondering what to do with it.
Leaving your property empty invites unwanted guests such as vandals, and squatters. And it is such a stressful task to dealing with Squatters. Leaving your property empty for a long time may also cause pests and other insects. Issues that go unnoticed can quickly turn into serious problems that will cost you more than you signed up for. Renting out the property will ensure that the home is taken care of, giving you peace of mind, even if you’re living miles away.
#3 It lets the property appreciate in value
One of the greatest advantages of investing in real estate is that it offers you the option to sell the house at the right time. Its value may not be the best today, but if it is located in a market where property values are expected to reach record-breaking numbers soon, then you’re hit the goldmine. Renting out the home allows you to earn passive income while you wait for the perfect time to sell.
#4 It diversifies your portfolio
Investing always comes with risks. Since it is highly volatile, you will want to diversify your portfolio. Think of it this way — if one investment runs into trouble, you will still have other investments to break your fall. Investing in rental property helps you mitigate those risks so that when the stock market takes an unexpected turn, you won’t be at a complete loss.
How can you ensure the success of a rental property?
Investing in real estate for the first time? Follow the tips below to ensure that your rental property generates the desired results:
#1 Get to know the neighborhood
One of the factors that you must consider when marketing a property is the location. Renters want homes that are close to essentials such as supermarkets, schools, hospitals, banks, and so on. Get to know the neighborhood. Picking the right location will give you an advantage in your marketing process. What features stand out? Is the property near top-rated schools? If so, you might want to market it to families with children. Is the home near offices? If that’s the case, your biggest market would most likely be young professionals.
#2 Make the property “show-ready”
Prospective tenants won’t be as attracted to an empty unit as they would be toward one that is furnished and well-designed. Apply staging techniques to make the home feel more inviting to its potential residents. If you are renting out a fully furnished unit, make sure that you choose pieces that will suit a variety of tastes. Not everyone wants a home that looks too contemporary!
#3 List the property online
These days, putting up a “For Rent” sign will not be enough. Many property investors are leveraging the power of the Internet to reach a larger market. List your rental property on high-traffic websites such as Zillow and Apartments.com, as well as the Multiple Listing Service (MLS) if you’re working with a property manager. Don’t forget to use high-quality photos of the property — this is the first impression that you’ll make when tenants see your listing!
#4 Screen tenants meticulously
The success of your rental property depends largely on the quality of your tenants. No landlord wants to deal with tenants who are always late on their rent payments, refuse to take care of the property, etc. Each prospective tenant should undergo a thorough screening process which includes verifying their employment, reviewing their rental history, checking their criminal record, and so on. This ensures that the tenant you end up choosing is the ideal one.
#5 Prepare a clear lease agreement
The best way to secure your rental property business’s success while protecting your investment is by preparing a comprehensive lease agreement. This can be done by an attorney who is well-versed in tenant-landlord laws. Make sure that the terms of the lease are explicitly covered in the contract, such as the monthly rent, duration of the lease, grounds for eviction, and other policies that you might set forth. To avoid loopholes, everything should be in writing. Do not feel obligated to sign the lease if there are matters which you think should be included.
Turning your property into a successful rental business and managing it requires a lot of time, money, and effort. There are multiple factors that you need to take into consideration, and many times, you will not have the luxury of time to make decisions. If you want the foolproof way of owning a rental property as a business, working with a Florida property management firm is the way to go.
Hire the property managers at Luxury Property Care today and we’ll help you maximize your real estate investment. Our team will take the time to understand your unique goals to ensure that you get the best outcome. Call us today at (561) 944 – 2992 or complete the contact form to learn more.