Making money off of your first rental property can be done with a few simple steps. Learn from your competition and experienced investors about the market. Also, remember to use all the best real estate market analysis tools you can.
Before buying your first rental property, don’t forget to use Mashvisor’s rental property calculator to make a successful investment. With those tips in mind, here are 8 secrets to making money with your very first rental property.
Your First Rental Property: Budget Well
Beginner real estate investors need to budget well when buying their first rental property. Budgeting well means making all the right calculations. Making money in real estate is all about cutting losses and expenses and maximizing profit.
If you know the level of risk associated with an investment property, you will be better prepared to handle it. The key here is to utilize the experience of previous real estate investors in the area. Find out how much is spent on properties in the area in terms of expenses and the profit made. The best way to find this information is to use a comparative market analysis tool. This tool will help you learn more about the properties in the area you are interested in. Then, use an investment property analysis tool. A good investment property analysis tool is an Airbnb calculator, such as the one offered by Mashvisor. This calculator will help you calculate all of the margins for your new investment property. As you learn real estate investing, remember to be realistic with your budget and expectations.
Your First Rental Property: Know the Market and Your Competition
Real estate investing is a competitive field in any area around the country. You will find that there are plenty of long term rentals and short term rentals everywhere. You should be aware of the market trends in the area. For example, in the past few years, the trend has been baby boomers selling their large single-family homes and moving into apartment buildings mainly occupied by other seniors. Based on the demographics in the location of interest, you can choose the right rental strategy for a profitable endeavor. Using different investment property analysis tools and comparative market analysis tools is ideal for finding this information.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Your First Rental Property: Make Them an Offer They Can’t Resist
Depending on the renting demographic, amenities can make a huge difference in why they choose to rent a property. This may be a bigger factor in short term investment properties such as Airbnb rentals. For example, a vacationer might opt for the Airbnb property with a pool or Wi-Fi rather than the one with a better location. Try to find out what guests are looking for and offer it to them. This way you will be securing being chosen and having fewer vacancies year-round.
Making Money with Your First Rental Property: Know the Rules and Regulations
Rule number one for real estate investing for beginners is knowing the laws. There is no point in buying an investment property that you can’t take advantage of. Buying an investment property you can’t use is a huge waste of time and money. This tip is especially important with a short term rental strategy. To avoid losing money, make sure you know the renting regulations specific to the city you are interested in before you buy.
Your First Rental Property: Get Good Tenants
Any experienced landlord will tell you that the key to making a profit is having a good tenant. Absolutely the best way to get started in real estate is to start with the right people.
Good tenants for long term rental properties are spectacular for many reasons. The first reason is that you know your property will be safe which will save you a lot on repairs. On top of that, good tenants will also let you sleep at night and will cut down on your managerial duties. Most importantly, good tenants will not leave you out to dry.
A good tenant means having a stable income month after month. For real estate investing for beginners, vacancies can be detrimental, which is why stable tenants are so important. No tenants could mean missed loan payments and paying out of pocket for many things. Even if good tenants decide to leave, they will give you a chance to find someone new. Do your due diligence and screen tenant applicants well before signing a contract.
Your First Rental Property: Hire a Property Manager
Hiring a property manager may seem like a great way to spend money instead of earning it. However, as many beginner real estate investors will soon realize, doing something right the first time is a huge money saver. Rental property management is a lot of work and requires a lot of knowledge. To reach the money-making step of renting to a good tenant, you need someone to find that tenant. Opting for a rental property management company will have you saving on maintenance costs and vacancies.
Your First Rental Property: Utilize the Space Well
Having an investment property does not only mean renting out single family homes as long term rentals. In fact, you may find that short term rentals are a lot more fitting for your situation. If you want to make money in this business, you need to think outside of the box.
The most profitable rental strategy for making money in real estate as a beginner is to start at home. Buying an investment property is a big step and one you don’t have to take to start. Instead of taking out a loan from the bank to buy a new property, use the one you have. If you have extra rooms, a backyard, or even a garage in your home, you can rent them out. In fact, renting out separate rooms can be more profitable than renting out a whole home. You can even opt to rent out your home for events on weekends. Keep an open mind and use all you have to your advantage.
Your First Rental Property: Location, Location, Location
This point cannot be stressed enough. Where you invest in real estate, whether you are a beginner or a seasoned investor, is very important. Where you invest in real estate has two different meanings. First, it means which city you choose to invest in. It also means exactly which property you choose to invest in.
For example, you may find that while you are able to live in California, you aren’t capable of investing in its real estate market. You may choose to invest in the Texas real estate market which is more affordable and profitable for you. On the other hand, where exactly the property is in Texas is extremely important.
No matter where someone is renting, they want the easiest option. If you are renting out single family homes, think about who the tenants will be. They probably have kids and want to be near schools, for example. Tailor the amenities that the property is close to with the type of tenants you are looking for.
Finally, remember to take your time when choosing a new investment strategy. Making money from your first rental property can have you on your way to a fruitful real estate investing career. To get more great tips and tools for a successful investment, visit Mashvisor.