How You Can Get Started With Real Estate Rental Properties
By the year 2025, the global real estate market is expected to be worth 4.2 billion dollars. So if you’re considering entering the real estate industry as a landlord, it’s a great idea.
But where do you start? We’ve put this guide together for you, outlining the steps you should take as you begin to invest in real estate rental properties.
Keep reading to learn more.
Real Estate Investing Definition
First of all, let’s start by talking about the definition of real estate investing. Simply put, it’s the entire process of purchasing, owning, and managing properties for a profit.
It includes owning a piece of real estate and renting it out, earning a steady stream of income, as well as eventually selling properties, generating additional cash.
The first step on your real estate investment journey? Learning.
Let’s start with the basics. What is real estate investing? It’s the process of purchasing, owning, and managing a property for a profit.
Included in this definition are owning and maintaining your property, earning a steady income stream, and selling properties to earn a profit at the appropriate time.
Next, you should study the basics of the real estate industry. This is the foundation you need.
Some of the essential categories you should study are the different types of properties, the various routes for financing, and the crucial legal aspects of the process including crafting contracts.
Take some time to find authors who align with your goals and vision. Then start reading their material to begin your journey.
Create a Plan
Next, it’s time to make a plan. No matter your market, there are tons of different ways to approach real estate rental properties. This is the phase in which you’ll decide on your specific strategy.
Another reason to create a plan is to keep yourself organized. We’ve all started projects without a clear direction, and it usually doesn’t end up well.
Take some time to establish goals. Think about these questions:
- When do you want to have purchased your first property?
- How much rental income do you want to generate each month?
- How many properties do you want to manage?
Next, decide on what your first year as landlord will look like. Take one step at a time. It’s usually best to buy one property to begin with and then expand down the road if you want.
Also keep in mind that you can and should regularly evaluate your business plan. Make changes as you go and recalibrate based on your new circumstances. This is a great thing to do.
Analyze the Market
Now that you have a plan, it’s time to analyze the housing market in your area. Start with some analysis.
How many homes are on the market and how fast are they selling? Is it common for a home to receive multiple offers? Are homes selling for more than the asking price?
In many areas of the United States right now, it’s a seller’s market. This means that homes are going quickly and above the asking price. But this doesn’t mean you shouldn’t buy, as this is predicted to continue for a few more years.
Choose Your Property Type
This is an essential element of your decision: what type of property do you want to purchase?
One of the big categories to consider is residential vs. commercial. Inside of the residential space, you should also think about the different options like condos, townhomes, single family homes, and duplexes.
You can also choose between renting your place as a traditional rental with long-term renters or go the Airbnb route. Both have their pros and cons.
Pick Your Location
Location, location, location–we’ve all heard this phrase when it comes to business. And it’s true. The location of your rental property is crucial in terms of the profitability of your investment.
Location has an impact on lots of factors, including:
- Price of property
- Level of demand
- Average rent prices
- Resale value
Don’t buy a property simply because it’s super cheap. If it’s too good to be true, it probably is. It may be in an undesirable area.
However, if you’re looking for a fixer-upper, this can be a smart route. Contact Ctr-nw.com if you need help with restoration.
Instead, find an area that’s clean, well cared for, and low in crime. Also see if you can buy something in a spot in town with lots of renters, like close to a college or medical center.
Rent for the Right Price
One of the final steps in your home buying process is choosing how much to charge for rent. In the investment space, it’s all about profitability. The difference of a few hundred dollars each month can have a huge impact on your annual return.
It’s important to look at the market in your area. Check out the average monthly rental rate for similar properties.
You don’t want to charge too little for your real estate rentals. This just means you’re leaving money on the table.
But you also don’t want to charge too much and have a hard time finding and keeping tenants. It’s good to find a sweet spot that benefits both you and your renters.
Final Thoughts on Real Estate Rental Properties
There you have it: the steps you should take as you enter the world of real estate rental properties. Now that you’ve read through them, it’s time to get started.
Remember to consider your specific situation as you move forward. Your area, your budget, and your goals will affect what’s right for you.
Want to learn more? Check out our blog for other business tips today.