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4 Practical Steps for Managing Your First Investment Property

April 2nd, 2020 9:49 AM by Margaret Michelle Williamson

Perhaps you’ve heard about the many benefits of investing in real estate, like earning passive income, maintaining control over your investment, and diversifying your portfolio to protect yourself from changes in the market. Ready to take the leap and reap the rewards, without taking unnecessary risks? Here are a few steps you’ll need to take to purchase and start managing your very first investment property.


The Initial Purchase


When you buy a home that you plan to live in, you can make an offer with a small down payment, but when you’re purchasing an investment property, you will generally have to put down about 20 percent of the home price. Don’t get discouraged if this means that you cannot invest in a home in a wealthier neighborhood. Instead, aim to buy an affordable home in an area where new businesses and services are starting to pop up. Ideally, you should settle on a property in a neighborhood where you can expect home prices to increase in the coming years. That way, you’ll be able to raise your monthly rental price accordingly and bring in more income.


As you conduct your research, you’ll want to link up with a real estate agent who specializes in working with investors. Not all agents are created equal, so make sure that they have plenty of experience with investment properties in the area where you plan to buy.


Inspections and Renovations


After you go through with your home inspection (you’ll likely spend $300 - $500) and officially close on your home, you’ll know which repairs and renovations you’ll need to pay for. During the inspection, make sure to carefully evaluate the quality of the central air conditioning system, especially if you live in an area where tenants will frequently use the AC during the warmer months. If the system is in need of repair, you could end up dealing with some very unhappy tenants when the weather heats up.


If the inspection results indicate problems, you may want to negotiate repair costs with the seller. Replacing the central AC system is an expensive project, but the overall cost will vary based on the size of your unit, the difficulty of removal and installation, the necessary materials, and the labor costs for the removal and disposal of the old system. Overall, you should expect to spend about $3,757 - $7,277 on installation costs.


Marketing and Meeting Tenants


Once you’ve replaced any outdated appliances and polished up the interior and exterior of your property, it’s time to start marketing your rental. Bigger Pockets suggests having professional photos taken to advertise online, listing your property on several rental sites, and putting up a “For Rent” sign in your front yard.


As you schedule viewings with tenants, use it as an opportunity to get to know them and learn more about why they want to rent your property. Going forward with a credit check and obtaining proof of income is the best way to determine whether they will be able to pay rent on time.


Being a Responsive Landlord


According to FindLaw, landlords are responsible for repairs, routine maintenance, and letting their tenants know when they will need to enter the property. Want your tenants to stay long term so that you don’t lose out on income while the property is vacant? Make sure to respond to their requests in a timely manner, especially if your property is in need of an emergency repair. If your tenants know they can count on you, they’ll stick around for years to come!


Investing in real estate is a smart choice for your financial future, but it pays to do your research before rushing to invest in a particular property. When you invest in the right neighborhood, renovate your property with modern fixtures and appliances, and run thorough background checks on tenant applicants, you’ll be able to increase the value of your rental, prevent extended vacancies, and gain a steady source of income. 

Article Courtesy of:

Katie Conroy

Posted by Margaret Michelle Williamson on April 2nd, 2020 9:49 AM


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