Right now, the real estate market is at a healthy middle point between profitability and the slump that it was in only a few years ago. This means that now is the perfect time to start investing in rental properties. When it comes down to it, investing in property with the purpose to rent out apartments and houses to tenants is one of the smartest investment moves you can make. Not only are mortgage rates at an all time low, but also there are a lot of available properties out there that can offer a significant return on your investment. However, it can help to have a few tips and tricks before you start pouring your money into property. Here are the top five rental property investing tips.
Research the neighborhood. Whether you are interested in American real estate investments or Canadian real estate investments, you want to know what the neighborhood is like before you put a single cent down on a property. When it comes down to it, you want to make sure the neighborhood is safe, central and that it has a good school system, which is important if you intend on marketing your properties to families.
Start investing in your neck of the woods. If you are new to the rental property investment world, you want to start investing in the areas that you know the best, which is usually your own community or region. The reason for this is simple: it is easier to manage and to look after rental properties in your own neck of the woods. Eventually, when you have the capital to hire rental management companies to look after your investments, you can start branching outwards. The last thing you want is to go all in and realize that you jumped the gun too soon.
Buy low and renovate. When you are investing in rental properties, you don’t need to spend a lot of money on renovations. While you may not want to purchase properties with major structural damage – you can very easily get great deals on properties that need a little simple sprucing up, like refinishing floors and painting walls.
Location is everything. Besides being in a good neighborhood, you want to look for properties that are perfectly situated. For instance, does the particular building or house that you are interested in investing in get a lot of light? Is there a great view? If you invest in a rental property with limited views and constant shade, it will be incredibly hard to attract investors.
- Be financially prepared. When you invest in rental properties, you want to have capital left over, because anything can happen. For instance, what happens if a tenant unexpectedly leaves and you are left to cover the mortgage? What happens when a tenant causes severe damage to a rental unit? At the end of the day, preparedness is everything when investing in rental properties – the last thing you want is to be sent downriver without a paddle.