In today’s housing market, many people are choosing to turn properties they have into rentals. Maybe you have purchased your first investment property and are wondering what steps to take to make it a successful rental business.
While owning a rental property can be an incredibly lucrative investment, it also requires a fair amount of organization, hard work, and strategy. So, if you are just starting to invest in rental properties, this post is for you!
Here are five tips to succeed as a rental property owner.
5 Tips for Building a Successful Rental Property Business
1. Choose Your Optimal Rental Strategy
When it comes to making a steady income from rental properties, the first step is to choose the best strategy for your specific property. Are you looking to have a long-term residential rental home? Or do you want a short-term vacation rental or Airbnb?
There is a wide variety of factors to think about here, and while no option is objectively better, it is important to take your specific situation, your long-term goals and the location of your property into consideration.
Be sure to visit our blog, “Long-Term & Short-Term Leases - Which is Better for You?” to better understand your choices.
2. Budget Carefully
When you invest in property, you need to budget for the short-term and the long-term. Whether you are looking at updates and renovations, or just want to be mindful of ongoing maintenance, planning is key.
Will you have to spend money to prepare the property for rent? Perhaps you have just purchased the property and it needs deep cleaning, or some paint touch ups. Will you be doing any renovations or updates to the property? Maybe it is the original carpet from 20 years ago and due to be replaced, or you would like to make some minor changes to the fixtures.
Once your resident is in place, will you have enough on hand if unexpected issues arise? We advise budgeting for 10% of the monthly rent in maintenance expenses.
Budgeting and setting realistic expectations can help you be a successful and prepared real estate investor.
3. Find High-Quality Residents
Selecting the right resident is an important step in succeeding with your rental property. This choice will deeply impact your experience as a landlord. Your goal should be to find the highest quality resident possible.
You are looking for someone who will pay their rent on time, abide by all the terms of your lease, and take care of your property as if it is their own.
You need to set up a solid resident screening process that stays consistent for each applicant you choose to screen. Following the same process time after time not only can result in finding qualified residents, but it will protect you from unknowingly violating any Fair Housing laws.
Things to look at while qualifying an applicant: Income, credit score, criminal background, civil background, previous landlord verification, and animals.
Although application screening can take time, it is one of the most important things you can do for your rental property.
4. Work with a Property Manager
There are two ways to manage a rental property. You can either self-manage the home or hire a property manager to do it for you. While self-managing might initially seem like the best way to save money, hiring a property manager is often the best investment you can make.
Owning a rental property comes with a long list of responsibilities. The best way to manage this high workload and make sure that everything runs smoothly is to hire a reputable property manager to take on all the tasks for you.
A property manager can handle resident related issues, maintenance, legal disputes, and budgeting for you. Additionally, they are often the best people to go to when you need advice while you navigate owning a rental property for the first time.
5. Continue to Build and Diversify Your Portfolio
If you are committed to becoming a full-time landlord or want to make property ownership your main source of income, the ultimate goal will be to continue purchasing investment properties. As you plan to do so, you will need to go through the same process of budgeting, screening, and decision-making.
Working with a property manager can be the best decision you can make for building your real estate portfolio and creating a lucrative rental property business. A dedicated property manager will make your life so much easier.
Bottom Line
At the end of the day, if done correctly, investing in rental properties is a great way to make passive income and build equity. If you are just starting out in the industry, hiring a reliable property manager is the best way to navigate all the ins and outs related to your rental home. That is where we come in!
At Service Star Realty, we are able to help guide you through any obstacle that you may face as a new rental property owner. From screening new residents to maximizing your income, we can answer any questions that you may have.
With us, owning a rental home will be easier than ever! Give us a call to hear more about our services and how we can help you kickstart your rental property investment journey.
Contact Service Star Realty today.
Service Star Realty
2929 East Camelback Road #119, Phoenix, AZ 85016
(480) 426-9696
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