Owning your own rental property is a slightly overwhelming goal. Not only is the work as a rental property manager difficult, but getting to that point of finding, buying, and managing your property is an incredibly difficult process on its own.
With that said, however, it’s certainly not impossible. Look around your neighborhood, or maybe your general area of town. There’s most likely at least a handful of apartment buildings, rental homes, or large rental complexes in your area. All of them are managed in one way or another, and need people like you who want to pursue this as a career.
But how do you jump from nothing, to owning a rental property? And how can you ensure that you make a profit and continue to profit for years to come?
- Start your research
Even if you’re nowhere near ready to own a rental property, you can still start your research now on where, what, when, and how you’ll purchase a property in the future. It’s extremely important that you know as much as possible about the neighborhood you’re thinking about purchasing in, as well as what your budget is for purchasing, and what kind of income you’re expecting.
First, you’ll want to take a look at your finances. Start with writing up what your current expenses are, listed out in detail, along with whatever money you are able to put aside for savings. This will help you build the framework for a budget that you’ll need before starting to look at property. Many rental properties will require around a 20% down payment, so your budget can help you figure out how to raise those funds. Take a look at these other helpful hints for saving the money for more ideas.
Once you’re on your way to saving the money, or if you’ve already reached your goal amount, you absolutely need to research the neighborhoods you’re considering purchasing in. Your research should be twofold; first, find out what different kinds of property sells for in the area. Next, determine the average rent that renters pay for that area. Knowing how much you’ll be able to charge for rent is partly based on the market for that area, and also based on the worth of the property you’re renting out.
- Find the right real estate agent
Finding property for sale on your own is certainly possible, but you’ll have a lot more luck and an easier time in general by finding a real estate agent to help you. One of the reasons it’s tempting to find your own properties to look at is to avoid the cost of hiring an agent. While the commission you’ll be paying an agent can cause your pocketbook a little pain, remember the benefits of having an agent on your side, like having access to listings before they go public, and having all the data to easily compare prices and market values.
Finding an agent you trust can help you multiply your property in the future as well. Once your agent has secured your first property for you, and you start to see profits and are looking to expand, you already have a person in place who knows what you’re looking for and has already developed a relationship with you.
- Start small
If this is your first time purchasing rental property, let alone any real estate in general, you’ll want to start small before jumping to the top of the rental property ownership food chain. The property owners and managers that own large complexes or multiple properties all over a city most likely didn’t start like that originally. They slowly built up from humble beginnings into the empire they have now.
So, don’t be discouraged when perhaps you need to start with just renting out a small house to a family, or even renting out a room in your own home. This experience will be invaluable to you, and can help you work through any mistakes or issues you have along the way, as well as giving you experience with keeping a tenant satisfied and happy.
Whether you plan on being the rental property manager yourself, or hiring someone out to do the job eventually, you should still know at least the basics and be willing to step in when needed, which brings us to number 4, below.
- Be prepared to do the work yourself
Part of owning a property is being prepared to get your feet wet in repairs, remodels, and general upkeep. While eventually you may be able to hire all these tasks out, as a new property manager you’ll more than likely need to step in and get the job done.
Rental properties require basic maintenance at all times, such as mowing the lawn, painting and cleaning in between tenants, and general upkeep and tidying the property. To save yourself a lot of money, you may want to take care of these jobs yourself, and possibly try and take on some of the bigger jobs like general home maintenance as well. Consider taking some local classes on repairs, and for the larger ones that require more expertise, you’ll want to find a professional who you can have a lasting relationship with to call on when needed.
Climbing the property ownership ladder can be a long climb, but a very fulfilling and lucrative one. For many people, the top of the ladder is owning the property, utilising a rental property manager to run the property for you, and having the property paid off so you can simply collect fairly passive income. But, this is only possible if you follow the steps listed above.
Take your time, do more research than you think you ever need to, and find a circle of professionals like your agent, property manager if applicable, and maintenance staff, and you’ll be on your way to the top of the ladder in no time.