When you choose to buy a property to rent out to tenants, you are providing housing to your community and acquiring a good investment vehicle for yourself. But to make sure your investment property is profitable, you need to consider what you buy and how you manage it once you take ownership of it. Here are some tips to help you find and rent a property that will be profitable.
Analyze Cash Flow Before Buying
As you are searching for a property to buy, it is important to look at the price of the property and compare it to how much rent you can charge for it. This is necessary because the property's rent needs to cover the property's expenses, including the mortgage, taxes, insurance, attached utilities, and any other maintenance and repairs it will need. And also consider the property's expenses relating to advertising it to potential renters, and paying for a property management professional to handle the property's ongoing tasks.
With the help of your real estate agent, you can analyze a property to make sure its cash flow is going to come out positive, or in other words its rent will cover its expenses. There are several methods you can use to determine this about a property, such as filling out a cash flow worksheet or comparing the price of the property to its potential rent with a One Percent Rule. The One Percent Rule states the rent you charge for a property cannot be less than one percent of its purchase price. For example, a property that is selling for $200,000 needs to rent for at least $2,000 each month for it to be profitable.
Offer Attractive Rental Features
After you buy a property, you want to do all you can to rent it to the best renters and keep it rented. If your property sits vacant for any amount of time, you are losing out on rental income and reducing your property's return.
Research the rental market to price your property at a competitive rental rate. This may require you to charge $5 to $10 dollars less than other rental properties each month, but it ensures renters don't overlook your property for similar properties with a lower rent rate. You don't want to rent your property out for a steal, but just make sure you are not overpricing its rent.
You should also offer full property maintenance to your rental and not let repairs and necessary maintenance go uncompleted. When something breaks, fix it. If your property needs snow removal or a lawn mowed, hire someone to do it or do it yourself. As long as your property's cash flow allows, you can hire a property manager that can take care of all these small details for you and make sure your property is well-maintained, which can lead to happy tenants who want to renew their lease.
Visit a website like http://gerberapartmentproperties.com to learn more.