Tips on Finding Your Investment Property Bearings
There are many ways to invest in real estate, from REITs to simply renting a room in your own home. However, if you have the time, energy, and patience, buying a rental property is a great way to get started. Here are some tips to help you get your bearings as you begin what might become a career in real estate, courtesy of Cincinnati & Northern Kentucky Real Estate Blog.
Understand the process.
Real estate investment marketplace Roofstock asserts that buying a rental property is not a one-step process. Begin by understanding what you want to get out of your investment. Next, study. Read books, listen to podcasts, and find a mentor that can help you get started.
You’ll also need to have a grasp on the financials, both your current financial state and how to manage your future potential monthly income and expenses. Then, once you know how much you can afford, choose your market and decide if you want to stick with a single-family home, a vacation property, or a multi-family unit.
Handle the Business Side First.
When you begin investing in real estate, you are essentially running a small business. As such, you’ll want to operate like a business that you expect to grow. Start out by forming your LLC, which is a business structure that can offer some protection against financial losses and litigations. Operating as an LLC, your personal assets are less likely to come under fire if you’re sued. To establish your LLC structure, you can use a formation service or, if you don’t have the time but do have deep pockets, can pay an attorney to do it for you.
Next, open a business banking account. If you’ve already got your legal entity set up, you can open an account with your business name. According to business lending solution provider Funding Circle, having a separate account can help you establish your business credit, which can help you qualify for loans later down the road if you need them.
Managing Your New Endeavour.
Once you buy your property, you have to make it marketable and handle the legal issues surrounding being a landlord or rental provider. These vary from state to state, and your realtor can help you get better acquainted with these. If you don’t have the time or energy to learn all of the ins and outs, consider partnering with a property management firm. A few things that you can do to start is to clean out the rental, make the outdoor area appealing, schedule pest control services, and have a home inspection so that you can rectify any issues that would affect your property’s marketability, safety, or functionality.
Next up, decide how much to charge for your rental. According to Homelight, there are a few ways to calculate this. One is to use the home’s value, but you can also price based on comparable rentals in the area. If you’re using a property manager, they will have a good idea of acceptable rates, and they can work with you to decide how much of a deposit you’ll want to collect up front and the types of fees involved for pet, smoke, or intentional damage.
Real estate is an ever-evolving industry. But, a few things always stay the same, and one of these is that people will always have a need to rent a home. This means there’s almost always a market for long and short-term rentals. If you are ready to take control of your finances, getting started in real estate, while not a 100 percent guarantee of financial freedom, is a good way to collect assets and generate a monthly income.
The Cincinnati & Northern Kentucky Real Estate Blog is your go-to source for information on all things real estate in the area. Owned and operated by veteran and licensed Realtor Paul Sian, the blog is a great intro to Paul’s experience and can offer insight into his professional services.