If you’re interested in real estate, and you’re planning to get started on your first real estate investment, then the first question that you will need to ask yourself is: How to find a house to rent out?
And yes, I did just assume that you’re renting out and not selling, as investing in rental properties is the best starting point for novices in the real estate inveseting business.
So, how to find a house to rent out?
It’s simple – learn here.
How to Find a House to Rent Out: Location
The first and foremost factor that you will need to take into consideration when trying to find a house to rent out is the location of the property. Location is key when it comes to real estate investments. As the nature of real estate dictates that once you’ve locked in on a property, you can’t change its location, you should always plan ahead when it comes to choosing the right, strategic location.
Related: Location, Location, Location – Is Location Really All in Real Estate Investing?
Make sure to choose an investment property in a developing neighborhood that has the potential to grow. This increases the chances of your rental property appreciating in the future, which can increase its value well beyond its current level, giving you a healthy, profit-making investment.
So, how to find a house to rent out in the best location? Consider the following aspects related to location:
- Crime rate: If the crime rate in the area is decreasing, it means that the area is improving.
- Employment: If job opportunities in the area are on the rise, it means the area will be attracting more residents in the future, enlarging your potential pool of tenants.
- Schools/colleges: Is the area a college town? Is there a school nearby the property? These are important questions to ask when deciding on a location.
How to Find a House to Rent Out: Strategy
Before deciding on a rental property to purchase, you need to set a strategic investment plan. In other words, what kind of strategy are you planning to use for your investment?
There are a number of real estate investment strategies that can work well for all kinds of real estate investors, both new and experienced:
The most basic type of real estate investment is perhaps the most efficient and the easiest one to get started in. Traditional lease rentals are long-term rental properties. This means that you’ll be renting out your investment property for longer periods of time, greatly reducing the amount of time and effort that you will have to invest in your property, as turnovers will only happen once every few years, and most of the time you’ll be enjoying a monthly rental income from loyal tenants for very little effort.
Although relatively new, Airbnb rental properties are becoming amongst the most popular ones, and in many cases the most profitable types of rental property investments. Airbnb rentals are short-term rental properties, which means that you as a landlord will be required to invest more time and effort into your investment property in order to keep it going and keep it occupied. This is only natural with any short-term rental investment, as you will have to manage the property and the high turnover rate associated with this type of real estate investment.
You should also make sure to learn more about Airbnb’s legal issues and policies in the state and city that you’re looking to invest in, as certain areas have increased restrictions on Airbnb rental properties under the pressure of the hotels and housing businesses.
Related: Choose the Right Property for Your Short or Long Term Rental
Buy and Hold
One of the methods for investing in rental properties can be looked at as a combination of renting out and selling. Buying and holding an investment property means that you will be purchasing a property with the intention of selling it out when its value increases, while also using it as a rental for the duration during which its value is increasing.
This can mean renting out the property for a number of years until it appreciates, while the rent pays the mortgage fees, and then selling it out for a margin of profit. Or it can mean purchasing a property to live in, and perhaps renting out a portion of the property (Airbnb is a great option of that), before selling it out when its value increases.
How to Find a House to Rent Out: Finances
The real estate business is a business after all. This means that at the end, it’s all about the money. If you’re investing in real estate, then you’re doing it to earn a profit. But investing in real estate also requires you to have money, to begin with. There are some exceptions to this, of course, and some financing strategies might not require you to invest your own cash at all.
However, being aware of your finances and the type of financing that you will use for purchasing your investment property is a major factor in deciding on the property that you’re going to buy. This is because there are different types of mortgages and investment trusts that can finance your investment through very different methods, and whatever method you choose will also rely heavily on the strategy that you’re trying to implement.
A brief example would be the 30-year mortgage for traditional rental properties, as traditional rental properties are long-term investments, meaning that a long-term mortgage goes well with it.
How to Find a House to Rent Out: Size
If you’re new to real estate investing, then it’s always better to start out small. When choosing your first rental property, it’s best to just stick to smaller residential properties such as single-family homes, studios, and small apartment buildings. This reduces the risk associated with the failure of the investment, while also giving you a sort of “playground” to learn all the practical sides and basics of real estate investment.
Keep in mind that your first investment property will not always be a success, and its return on investment will most probably not make you a millionaire. But do not shy away from failure or from making mistakes. In real estate investing mistakes are learning opportunities, and you should not underestimate the amount of experience and knowledge that you can gain from your first investment.
How to Find a House to Rent Out: Tenants
Know your target tenants. While this is more related to the marketing of your property, it’s also good to keep it in mind when deciding on a rental property to purchase. This is because certain types of investment properties are more suitable for certain types of tenants, and the tenants are the blood of your investment; they are what keeps your investment property going.
When trying to figure out how to find a house to rent out, the three major factors that you should base your decision on should be the location of the property, your investment strategy, and the size of your investment. Which means that by the time you’ve figured out all of the above, you should already have a clear picture of the target tenant pool that is most suitable for your rental property, and you should build your investment plan around this type of tenants in regards to demographics and marketing.
How to Find a House to Rent Out: Conclusion
The tasks associated with how to find a house to rent out should not be difficult task once you’ve educated yourself and have done your research.
Related: How the Property Filters at Mashvisor Make Your Property Search Easier
The most important step to every real estate investment is researching. Whether it is a residential or a commercial property, a rental home or a fix-and-flip, there are always more things to learn about in the real estate market, and in order to make your way to the top of the investors chain, you need to carry with you an amount of knowledge and experience that can match your investment income. Otherwise, your investment journey will be cut short by severe losses.
Also, make sure to check out our website at Mashvisor and to use our Mashvisor Property Finder in order to find the best property for your investment, along with a bunch of data that can help you make the necessary calculations and comparisons for the optimal investment strategy.