It’s widely acknowledged that real estate is a safer investment than most. Despite this, purchasing your very first investment property will come with no small measure of trepidation — and for good reason. Like all ventures, it still comes with risks, not the least of which is a high vacancy rate that can potentially result in negative cash flow. On the other hand, it also comes with opportunities. Fortunately, with the right mindset and strategy, you can ensure that the winds of fortune blow in this direction, instead. So, let’s explore the measures you need to take to make money out of your investment property.
Making Your Investment
When investing in rental property, it’s important to know right off the bat that not all properties are created equal. The fact is there are properties whose success is a foregone conclusion and others that are doomed for failure. This begs the question: How do you, as a first-time investor, separate the wheat from the chaff?
The answer lies in the very tenet that experienced realtors live by, and that is location. More than just a real estate cliche, this can almost single-handedly make or break a rental property, which is why it’s very important to start here. As a rule, you will want investment property that is in close proximity to establishments like schools, restaurants, stores, and tourist spots, as well as public transportation. Interestingly, having a Starbucks in the neighborhood is also ideal.
There are, of course, other features that you should also consider when on the market for an investment property, such as the number of rentals and corresponding vacancy rates in the area, forecasted property taxes, and even the condition of the property. But generally, if you’ve got the location aspect down pat, you’re already well on your way to making a good investment.
Setting It Up for Success
As soon as you have an investment property to call your own, it’s very important to hit the ground running and start setting it up as a rental. There are different kinds of rentals that you can position your property as, so it’s a good idea to determine whether you want a long-term or short-term rental, as both have their respective sets of pros and cons to consider.
Next, you will want to furnish and decorate your property so that it’s compelling to potential tenants. Fundamentally, this will entail making upgrades that are both attractive and functional, as well as ensuring that you have irresistible amenities on offer.
Lastly, don’t forget to invest in security. Be aware that it is your legal responsibility to provide a safe and secure place for your tenants, so it’s a good idea to put in place a mix of high-tech and low-tech security measures that are efficient and budget-friendly. At the most basic level, you can ensure that visibility is not compromised by shrubbery or bad lighting. An equally good idea is installing an alarm system, which will set you back around $675, or more if you use a monitoring service. Finally, check with your local police department to see if they will do a security check of your property to help you identify any potential problem areas.
Getting the Promised ROI
Of course, all your efforts will be for naught if your rental languishes on the market. Know that having a rental property demands constant work that includes marketing, vetting tenants, maintenance, and even bookkeeping, which can be daunting to a novice. Thankfully, you can outsource these tasks to a professional property manager, which is a feasible option if your own time is limited or if you just don’t want to leave your property’s profitability up to chance.
Suffice it to say, with every investment property purchased, there is a considerable chance for success and profitability, as well as for failure. Yours will depend on your savvy and the amount of work and resources you put in. So, which way do you think the wind is blowing for you?
By: Katie Conroy
Photo via Pexels