It’s only natural that first-time investors would want to see their first rental properties generate maximum returns. While it’s entirely possible to see considerable success with your first rental, this doesn’t mean that you won’t have to put in a fair amount of work to bring about this success. Fortunately, as long as you aren’t afraid of putting forth some effort, there’s a good chance your first investment property will prove highly profitable.
Get Advice from Seasoned Experts
Purchasing your first investment property without first seeking the advice of seasoned experts can be a real gamble – and given how much money is in play, it stands to reason that you’d want to play things as safe as possible. So, before committing to buy anything, get in touch with anyone in your usual circle who has real estate experience to impart. For example, if any family members, friends, coworkers, neighbors or general acquaintances have experience owning and/or managing investment properties, they may be able to provide you with invaluable advice.
If your social circle lacks someone with relevant experience, reach out to a highly-rated real estate investment company. Seasoned investors will be able to offer up a plethora of helpful tips and educate you on the basics of locating profitable investment properties. Additionally, should you have any questions about the importance of a good location, the foremost indicators of smart investments or the one percent rule in real estate, they’ll more than likely be able to provide you with satisfying answers.
Carefully Consider Profitable Locations
Location is vitally important to all real estate investors. In fact, it’s no stretch to call location the single most important factor in any real estate deal. So, while you’ll still want to seek out well-maintained, amenity-rich properties, you should never regard location as an afterthought. Purchasing an investment property without first engaging in thorough location research is a decision you’re likely to wind up regretting.
When considering potential locales in which to invest, demand for housing should be foremost on your mind. After all, the more interest people have in living in a certain area, the more rent they’ll be willing to pay. So, when researching an area, make sure to peruse local property prices and rental rates, as this will help you determine how much you can expect to pay for a rental property and how profitable that property is likely to prove. Of course, it also helps to consider such factors as population size, long-term growth projections, job market, median income, crime rates and school quality. All of this information will help you form a clear picture of how beneficial a location is likely to be to your financial bottom line.
Be Careful About Taking on High-Risk Renters
Without tenants who are willing and able to keep up with rent, you’re going to have a difficult time profiting from a rental property, regardless of how well-maintained the property is or where it’s located. While there’s no definitive way to determine which rental applicants will ultimately prove problematic, a good screening process can dramatically reduce your odds of taking on high-risk renters.
As such, everyone who submits a rental application should undergo a meticulous screening process. No matter how positive a light someone is able to paint themselves in over the phone or during an in-person interview, you should never forego proper screening. For best results, your screening process should entail obtaining proof of income, having a look at credit scores, checking criminal backgrounds and reaching out to references.
Of course, not every landlord has the patience or personal bandwidth to undertake applicant screening on their own. So, if you work with a dedicated property manager or any other office staff, consider enlisting their aid in this task. You should also think about working with a dependable screening service.
Although success is what every real estate investor strives for, it’s important to understand that it’s never a guarantee. And while some investment properties can be a boon to your financial bottom line, others are likely to place a tremendous strain on your time, energy and resources. That being the case, it pays to exercise discernment when hunting for suitable investment properties. Fledgling investors looking to reduce their chances of purchasing a lemon would do well to heed the advice outlined above.