How to Set Your Rental Up for Sustained Success
BY MARK SIMONS
Are you a first-time investor hoping to start your real estate empire? Great. Real estate is almost always a booming business, and you should have no trouble finding a renter to help pay the mortgage on your investment. Today’s tips can help you set your rental up for long-term success.
Make Sure You Can Afford Your Rental
While it might sound like a no-brainer, make sure that your rental falls well within your budget before you make a down payment. Research current mortgage rates and available properties. While you hope for rental success, it may take months to get a qualified renter in place, and you still have to pay the mortgage while you wait.
Form a Business Entity, Such as an LLC
Forming a legal business entity legitimizes your rental. Having an LLC also protects your personal assets in case legal action is ever taken against you. If you’re not sure how to register, you have a few options. You can hire an attorney, which may cost you several thousand dollars. Or, you could use an online formation service, which is less expensive.
Market Your Property
When the real estate market is hot, it’s easy to assume that renters will flock to you. This isn’t always the case. No matter what type of home, condo, cabin, or apartment you are renting out, you have to market it. Marketing consists of many different things, including social media.
You’ll also want to make sure to have print and digital PDF documents available for potential tenants. By using an online PDF editor, you can make changes based on any upgrades you make to your property. All you have to do is upload the file, tweak the changes, save it to your computer or to the cloud, and share.
Make Repairs
Unless the house you're planning to rent out is brand-new, there’s a good chance that it needs at least some work. Make sure that it’s painted and that there are no functional defects that might have a negative impact on your renters. You’ll also want to consider adding new floors. Landlord Studios suggest carpet, tile, hardwood, laminate, or LVT.
Look at Your Pricing Strategy
There are many different ways to price a rental, and the RentPrep blog explains that your pricing strategy should be based on everything from property worth to local rental rates to the demand in your area. Whatever you choose to charge, make sure it covers your expenses, and don’t forget to write off improvements you make to the property to help with your tax bill come April.
Know Your Legal Obligations
As a first-time landlord, you also need to get to know your legal rights and obligations. You’re responsible for managing your tenants, making sure that the home is habitable, and for basic property maintenance, such as pest control and safety checks. You’ll also have to follow along with housing laws and, if necessary, evict your tenants based on current local regulations. Your best bet is to hire a property management company, which should be a licensed agency that can handle all of the legal responsibilities, including rent collection and documentation, on your behalf.
Owning rental properties is an excellent way to grow your investment portfolio and establish generational wealth. However, you have to make the right decisions from the get-go if you want your property to be profitable. From utilizing both print and digital marketing, forming an LLC, and choosing the right repairs and upgrades to knowing your landlord duties, today’s tips can help you start out on the right foot and set yourself up for long-term success.
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