When considering the different classes of investments available today, rental properties are still one of the best classes available, as long as you select the right property for your investment. It is important to weed out any bad investment properties while shopping the market, then manage your rental property successfully. To help you make your rental property investment successful, here are two key team members that can help you during the process.
Finding a good real estate agent is the first step to looking for an investment rental property. As a real estate buyer, your realtor will work for you with your interests and needs as their priority. And your realtor's commission will be paid by the seller of the property you eventually purchase, so you get their services at no cost out of your pocket.
It may be helpful to interview several realtors before you decide to hire one, as realtors can have different levels of experience and knowledge. Be sure to look for a realtor who is knowledgeable about rental properties, preferably one who is already a real estate investor. This will help them to know rental rates or how to find out what rental rates are for an area. As you look for a house, duplex, triplex, or other property, your realtor will be able to help you look for and analyze such things as cash flow and appreciation potential in a property. Not all properties can be a good rental investment, and a good realtor as your team member will know that.
Your real estate agent will have access to the online listing database of all properties listed with realtor services. This will help you search for property criteria, such as a specific neighborhood, type of dwelling, or price range. Then, your realtor can help you put in a purchase offer and negotiate the purchase terms on an investment property, and coordinate all the closing and settlement details of your purchase. For help finding a realtor, contact a realty company in your area.
Once you have acquired an investment property, hiring a good property manager to manage the property can help your investment remain successful. Your property manager can take care of many of the day-to-day activities of your property, freeing up your time to complete other work or to look for new properties to invest in.
A property manager's responsibilities can include screening new tenants, advertising and showing your property to potential renters, collecting rents, handling repairs, and following the state's required eviction processes. Your property manager will have their own team of trusted service professionals to take care of these tasks, so you don't have to worry about searching for and hiring your own.
A good property manager will send you out a monthly statement of all your property's expenses and income, which can help you when you file your taxes each year. Many of your property's expenses are tax deductible, including depreciation on the property, which can give you a tax shelter and lower your taxable income.
When you are shopping for a property manager, expect to pay them a monthly percentage of the gross income on the property. For a single-family rental property, you can expect to pay them approximately ten percent of your property's gross rental income. If you have several single family homes or a multi-family property a property manager is handling for you, the fee percentage can be from four to ten percent of the gross monthly income. Then, your property manager will usually charge a tenant placement fee, which is a one-time fee for finding and screening a new tenant. This fee can be a few hundred dollars up to the amount of one month's rent.
Use this information to help you buy and manage your rental property investment.