Investing In Residential Rentals — What You Need To Know
Investing in residential rentals can be lucrative, if done right, and not so much fun if done wrong. Both seasoned and novice residential landlords can benefit from remembering a few tried and true basics before jumping into any particular property investment:
- Study ALL of the financing options available — from “all cash,” to conventional bank financing, to “hard-money” lenders, there is a broad continuum of financing options available, each with their respective “pros” and “cons,” one of which might be exactly the right option for any particular property in any particular situation. Don’t think that you know the best way to finance a prospective real estate investment unless you have actually taken the time to research your options for that particular investment opportunity.
- Consider the potential NET income from all sources — not only should you consider the current rents (if currently rented) but also the potential rents after improvements and operating efficiencies are factored in. Also, don’t forget to factor in ALL potential income from various sources, e.g.: laundry, parking, storage, miscellaneous fees, etc.
- Be sure to get a THOROUGH inspection — be sure to have qualified tradesmen look over the property and give you an honest appraisal of its condition, “warts and all.” A less than perfect property is by no means a reason to reject a property outright, but a clear and realistic understanding of what you are getting into is imperative. Be sure to go beyond a general, cursory inspection when warranted, e.g.: certain properties may warrant the extra $300 expense to have a camera run through the “stacks” to check on the condition of the plumbing.
Lastly, do this right. A penny pinched up front can literally cost you thousands on the back end. Qualified advisors are worth their weight in gold, so don’t skimp and be prepared to pay for good advice. Make sure you have an attorney, accountant, property manager, property inspector, and qualified tradesmen (A/C, plumbing, pest control, roofing, etc.) to whom you can turn for advice before committing yourself to investing in residential rentals.
Investing in residential rentals can be lucrative, so long as you do the required work up front to avoid surprises down the road.
Contact Real Property Management of Sarasota & Manatee HERE, or at 941-225-8183.