Rental Property Basics
The idea behind investing in property is to make a profit by doing so. In theory, it’s simple. Buy the property, rent it out, make the profit. In practice, there’s so much more to it. You need to acquire a property that fits your budget, won’t require too much work to make it livable and is in an area where it will rent to good tenants. If you’re set on making your living on property management, you have your work cut out for you. It’s definitely doable, though. You’ll need to do your research first, is all.
Steven Taylor Los Angeles, President of Taylor Equities, specializes in acquiring apartment buildings that are a bit run down. He then takes those buildings and turns them into desirable accommodations as rental properties. In his article “What to Look for When Buying a Distressed Property,” Steven Taylor LA talks about being very detailed when setting your budget for taking on such a project. He emphasizes that if you’re realistic about how much work the building will need and how you’re going to fix the problems, you can absolutely expect to make a profit with this kind of investment. He says that the key to your success is to figure out your realistic budget before you make an offer. Doing so will prevent you from getting in over your head.
Some of Mr. Taylor’s advice on buying a multi-unit apartment building applies to becoming the landlord of single-family homes, too. Be sure to set your budget realistically. Invest in a thorough inspection by a qualified and highly recommended building inspector. Don’t skip taking a very close look in the crawl spaces, attic corners and everywhere in between. Knowing what work you’ll need to do, how much that work will cost and how long it will take before it’s done and you can get renters settled will help determine whether you can afford to invest in the property without compromising your own financial future.
Your New Tenant
Preparing for renters doesn’t just mean you’ve got the building in order, it means you’re actually prepared for a human being to reside in your rental property. You can’t just rent to anyone, either. You need to ensure the person or family is a good risk for your investment. Asking for proof of employment is allowable. It ensures the person can pay the rent they’ll owe you. How many people will live there? Are there pets? Do your due diligence on your prospective tenants to get the best match.
While owning rental properties can seem overwhelming, it can be a good source of income for the well-prepared.