Real estate investment in rentals may initially seem quite intimidating, and, yes indeed, there is a lot to know. However, a methodological approach will keep beginners focused on what is important to help deliver the home run. We recommend that beginners keep the following three aspects in mind when preparing to undertake an investment.
3 Aspects to Consider for Real Estate Investing
1.Knowledge is Key
School yourself in order to reach a greater understanding of real estate rental investments. This will increase the likelihood of success and help you avoid problems ahead of time. Even the top players stay up to date with the latest trends and opportunities. There is a wide range of information available online, and it is also possible to learn from experienced mentors.
2.Create a Business Plan
Define your financial goals ahead of time, and conduct your dealings in a professional businesslike manner. Calculate your actual profit from rental income by deducting all factors. These include the mortgage interest payments, running costs, agent and service fees, as well as insurance charges. Furthermore, your due diligence process needs to be meticulous. Also, look for a property that has appreciation potential and a positive projected cash flow.
3.Professional Property Management
Property and tenant maintenance are important aspects of running a successful rental investment. It goes far beyond the initial screening of tenants and collecting monthly payments. Although it may account for an additional cost, it is recommended to handle your property management with a professional company. This will usually deliver lower maintenance costs, experienced handling of legal issues, more stringent collection, higher tenant retention, and shorter periods between tenants. Furthermore, it will leave you more stress-free, which is important to free up time to delve more into the business side of your investments.
The Importance of Local Market Knowledge
Location is the name of the game. Every state has excellent cities, with great neighborhoods and good properties. As such, it requires a lot of in-depth research to learn the facts about all of the aspects that affect the lucrative nature of your rental purchase. Some of the information may be widely available on the internet, like the macroeconomic factors promoting job and population growth in the region, while other information may require local market expertise.
What is it specifically that you need to be aware of?
- Rental Income:It is imperative to find out what the average rent in the area is. If charging the average rent will not enable you to make your mortgage, taxes and other payments, then there is a problem with your business plan.
- Local Property Taxes:Property taxes vary from area to area. As an investor who makes income from rent, you need to be in the know of how much you will be losing to taxes.
- The Local Job Market:Areas which provide growing employment opportunities will usually attract more tenants.
- Neighborhood and Amenities:There are a multitude of factors affecting neighborhoods and tenants. Proximity to universities bring students, and there will be a higher amount of vacancies over the summer periods. Quality of schools will also attract a higher caliber of tenants and affect the value of your investment. Amenities, including shopping centers and access to public transportation, need to be reviewed. It is also important to look into the local level of crime and safety in the neighborhood. Also be sure to review the amount of listings and vacancies for the area to try and develop an understanding of how successful your rental investment will be.
- Future Development: It is important to review municipal planning for the area for the years to come. This will help you understand how infrastructure and zoning changes might affect your investment.
The Role of Social Investment Networks for Beginners in Real Estate Rental Investments
Social investment platforms with portfolios in multiple markets may be the answer to your initial investments in real estate projects for the purpose of rental investments. iintoo as a platform offers investment opportunities for multi-family rentals from as low as a $25,000 investment.
The ease of utilizing a social investment platform will help you over the chasm of acquiring in-depth knowledge. It will also enable you to become proficient by reaching the required business acumen to perform the required due diligence. It furthermore circumvents your need for acquiring personal local market expertise.
With iintoo, you can now enjoy the benefits of accredited investors’ collective wisdom. You can also gain access to quality investments, with the ease of investing via a simple-to-use and secure platform.