Buying real estate investment properties is a lot easier said than done; real estate investors have to ensure the profitability and state of any possible investment property. Whether you’re going for single family rentals or multi-family rental properties, it all comes down to carefully analyzing your investment choices and narrowing it down to the absolute best real estate investment.
Simple guidelines to keep in mind when buying a single family rental property
We’ve researched and gathered the best techniques employed by successful real estate investors to find the best real estate investment properties when it comes to single family rental investing. The list below includes the best tips to ensure successful single family home investing:
Make an investment decision based on real estate analytics
Ask any expert real estate investor about making a successful property investment and real estate analytics are sure to come up in the conversation. The importance of real estate analytics comes from real estate investors needing to forecast future numbers for any income property. In the case of single family rental properties, real estate investors must have an idea of the cap rate, cash on cash return, and even occupancy rates. These numbers will help real estate investors get a full picture of the capabilities any real estate investment property can offer. Consider using Mashvisor’s investment property calculator to know the analytical behaviors of any real estate property in your area. Click here and enjoy the 14-day free trial!
Accordingly, many beginner real estate investors go for investment properties while calculating real estate appreciation. You should never make investment decisions based on real estate market fluctuations. The key reason for that is the constant changes and factors that influence the US real estate market. What may indicate high real estate appreciation for a specific region or city may not perform as promised and you’ll end up with a negative cash flow income property to deal with.
Don’t let emotions take hold
This is an important one for novice and beginner real estate investors. Why is that? Well, mainly because the only experience you have with selling and buying real estate property has happened through your primary residence. It’s a completely different story when going for a real estate property as an investment. Of course, letting emotions run wild when buying your first home is different than buying a property. Your first and only reference is to look at numbers! Accordingly, single family rental investing benefits greatly from the previously mentioned real estate investment analysis.
Budgeting is your best friend
This part goes into details with financing single family rental properties. When buying a single family rental, real estate investors are looking for a financing method that offers affordable interest rates and a payback plan that meets their financial lifestyle. When you buy a single family rental, you must start thinking like a landlord (not an easy task to achieve). This includes budgeting and factoring in rental property expenses and costs. To dive deeper into rental property expenses, read this blog post: 9 Rental Property Expenses Real Estate Investors Shouldn’t Forget.
Investigate the neighborhood
Knowing your local real estate market should be a property investor’s requirement! Knowing the reasons behind the market growth is key in pointing out the lucrative real estate deals. Keep your eye on the lookout for population rises, employment growth, and even business migration in any city. These key indicators can tell you what the next “It” neighborhood will be with real-time data! For instance, If you’re looking to start making money in real estate in a real estate market full of single professionals, you might be better off with multi-family rental investing and basically renting out apartments instead of single family rental properties.
Read this blog post to help you decide on a real estate investment strategy: Single Family vs. Multi Family Rentals: Which Is the Right Real Estate Investment for You?
Research landlord-tenant laws
The beauty of being a part of the US real estate market lies in the regulations that govern every aspect of real estate investing! An investor must know the laws and regulations to make sure that his/her actions always fall within them. For example, a real estate investor looking to invest in Airbnb rental properties is best advised to brush up on the latest regulations in that regard in his/her city. You definitely don’t want to buy an investment property then have to change your optimal rental strategy for the property because the law doesn’t allow it!
Build a real estate investment network
From the beginning of your journey as a real estate investor, you must be aware that building your real estate investment portfolio does not come cheap. There will be costs and lots of them! In any case, with your first income property investment, you will have to deal with many professionals to get the keys from the seller to you. These professionals are what we call a real estate investment network.
To specify, a real estate investment network can include anyone from mortgage brokers to contractors and agents. The entire concept is built upon the need for such professionals to ensure a successful real estate investment. Accordingly, dealing with one professional repeatedly is going to make your life a lot easier than building relationships with a new contractor or real estate agent everytime you want to add a new investment property to your real estate investment portfolio.
Looking to build a real estate investment network? Read this blog post: Build the Dream Real Estate Investment Network in No Time.
Calculate all the incomings and outgoings of your property
This one might fall within the budgeting category, but we chose to specifically explain it in this one to emphasize its impact on your single family rental’s success. We’re not talking about your tax bill or utilities, we’re talking about replacing roofs, HVAC units, and major renovations. Such costs must be calculated as they can definitely put you in a deficit if not planned for. The best advice to ensure not going into a deficit is to put money aside from the rental income to ensure things don’t get out of hand if the roof starts leaking!
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Buying a single family rental property should be on the agenda of any real estate investor! If you’re looking to begin real estate investing, buying a single family rental property is what you need! Keep in mind that a real estate investment portfolio must be diversified enough to meet many investment strategies. So, what are you waiting for? Start real estate investing and benefit from the perks that come along with it!
If you have any more insights on single family rental investing, please share them with us in the comments section.