Being your own boss sure sounds perfect but it requires dedication, hard work, and of course the right planning for your business. Although the toughest part is choosing which business you want to start. And if you have down that then you just need some planning. And that’s why we are writing this article. It’s obvious that the topic of our article is How to Start A Rental Property Business. One thing we wanna let you know is, you have made a wise decision by choosing the rental property business. A lot of people have invested in this business and they have been succeeded in it. With the right strategy, you can earn a good amount of money and become financially independent as well as live your dreams without doing a 9 to 5 job.
Before telling you “how” to start a rental property business let’s take a look at “what” is a rental property business.
A rental property business is where an investor will purchase and manage one or more properties from which he can make an income. These properties will be rented or leased to tenants for a monthly or yearly rent. An investor can either look after the property themselves or they can hire an association agency who will look after their business property and manage them.
It sure seems an easy task at first but you have to be careful with the decisions you make and how you plan your rental property business. Let’s move one and tell you a few steps which can help you to start a rental property business.
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1. Do your research
It’s pretty important that you have full knowledge of what you are stepping in. Since you are investing a lot of money so you have to make sure you understand the basics of the rental property business. You will also have to understand whether or not it will give you the returns which are expecting and what will be the minimum investment for a rental property business. Your research for the locality of the property in which is purchasing your property and how much you can expect the rent is also important. It with solid research you can come up with a good business plan that can further help you make the business profitable.
2. Join a Real Estate Investor Club
If you lack experience then getting in touch with other investors and see how they will prove helpful. And joining a local real estate investor club will help you to enhance your network or you may also find an investor partner (if you are looking for one!).
3. Choose a market
No matter where you are investing money it’s important that you are picking the right place to invest. Obviously, you don’t want to invest someplace where there is less chance of your property to find tenants. So here you will have to do comprehensive research to pick the right location for your business.
You may also want to choose a niche, that is you will have to decide your targeted tenants. For example, you can pick a huge building rent it to corporate tenants similarly you can invest in houses and rent them to families. This is also important because you will need a separate strategy for different tenants!
4. Figure out Finance
We don’t really need to tell you how important it is to figure out the finances before you step into any business. You will have to secure your finances as well. If you don’t have the capital to invest in a property then you can always go for loans from other investors who are looking forward to investing in the real estate and there are also some private lenders as well. It’s also important that you are aware of your financial status and you know exactly how much you can invest and therefore look for properties within your budget.
5. Buy your first rental property
If you have down full research, figure out your finance and you know which location will be suitable for your rental property business. Then don’t wait anymore and buy your first rental property. Just be sure that you have invested in the right property and you are aware of the cash flow which will be generated via the property.
6. Hire a property manager
Well, a lot of rental property owners may look after their own property but it’s always a good thing that you hire a property manager. Because an investor will have to look after their own property in more than one way! A property manager will also help you to find out the potential tenants or customers. They will expand your portfolio without you investing your precious time. They will also help in taking care of collecting rent and other stuff.
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7. Do a maintenance check on the property
You must have looked at the property before buying it but in order to get tenants, you will have to make sure that the place is in amicable condition and it’s an attractive place to live or work for your tenants. So if there anything that needs to be fixed goes ahead and make sure it’s done before you rent it. It’s important that you have an idea about the budget for maintaining the building. The easiest way to find out what needs to be fixed in the property is to live there for a day or two (if it’s a residential building) or take an inspection so that you get a broad idea.
It’s important that you do a routine check-up on your rental property that always checks the property after a tenant leave and before a new tenant arrives.
8. Incorporate the rental business
You don’t wanna have personal liability and face any kinda losing with your first tenants so its highly recommended that you incorporate your rental business as soon as possible!
9. Determine the right rent
It’s kinda the main goal of starting a rental property business that you earn good money and more importantly the “right” amount of rent for your rental property. A property manager may help you with determining the right rent but if you haven’t hired one then you may need to educate yourself about the right rent for your property.
There are lots of factors that determine the rent of a property such as the location, the price of the property, the size of your property, etc. Although the general thumb rule says the rent should be between 0.8-1.1% of the total value of the property! You will also need to check the rents for comparable properties in the area.
10. Market your rental property!
You have bought your rental property, you have made it ready for tenants and you have also decided a rent now one thing is left which is finding the right tenant. And to make this happen you will have market your property and let everyone know that your property is available for rent! If you have hired a property manager then you won’t have to deal with it but if you have to decide to be landlord then you will have to find tenants yourself. You can for the traditional way of marketing a property that is by putting an ad in the newspaper or making posters. Or you can take advantage of being in a digital age and make use of the internet to market your rental property. You can also get referrals from other investors or realtors.
11. Come up with a rental system
It’s important that you work in a system to get the right tenants. You don’t wanna deal with bad tenants right, so it’s important to decide whom you want to give your property for rent. In order to do that you will need all the necessary and required details of the tenants. And you will also need to check a complete background check on tenants just to be sure that they are the right fit for your property.
12. Buy Landlord insurance
You must have invested a lot in your rental property and by putting it on rent, there is always a risk! There are many things that can go wrong with your property, such as, your tenants can damage the property, or the damage can take place by outside perils such as earthquakes, fire, storm, etc. So there are many ways your property can get damaged and we are sure you don’t want that, and that’s where you will need landlord insurance. Landlord insurance has many benefits so it’s essential that you invest in landlord insurance.
So here our article for how to start a rental property business comes to an end. The bottom line is it’s workable and you can totally get success at a rental property business with a good strategy and making sure you are on the right path. We hope you found our article helpful so thank you for visiting our page!