Here’s the bottom line: Investing in long-term rental properties is a great way to build wealth. But it’s by no means easy. You need to know the right steps to take. In this blog, we’ll walk you through those steps. Get ready to learn what you’ll need to do when investing in long-term rental properties. Let’s get started…
Assess Your Financial Position
Before you do anything it's important to assess your financial situation. Make sure you have the necessary funds and that you’re secure enough to take a considerable risk. An emergency fund is recommended. Also, having a good debt-to-income ratio is important too.
While owning rentals comes with significant financial freedom and other benefits, you can’t go in with your eyes closed. Below are some tips for success and best practices. Some things to focus your research on:
● The local economy
● Job market
● Areas with high demand for rental housing
● Leasing and maintenance responsibilities
● Know your ideal tenant
● Plan for contingencies
Some tools that may help are the U.S. Census Bureau and Zillow.
Create a Detailed Strategy
Once you’ve done your research it’s time to lay out a plan of action. You can invest in single or multiple residential properties. Things to consider are…
The cost of the property, the potential rental income, and the expenses associated with maintaining the property.
Secure Financing Options and Different Investment Strategies
This step is crucial. If you don’t have the necessary cash, then using a private lender such as Temple View Capital might be your best option to securing financing with a private loan program. Temple View’s rental loan program provides you with the ability to close quickly by using a reliable and experienced lender as your financing partner. Below are some other financing options and investment strategies to consider.
● Fix & Hold: Buy, Renovate, and Rent
● Bridge Loan
● Rental Loan
You'll want to consider factors such as the interest rate, loan term, and fees associated with each option.
Find the Right Property
Now it’s time to find the right property. One option is to look for properties that are in good condition and are located in high-demand spots. You don’t want to invest in an area that’s declining in value. When looking at locations, be sure you look out for market trends. Compare different locations to see where the prices are the most profitable. Or you can go for a property that needs some work done. This option will be cheaper but will have some renovation costs.
Hire a Property Manager (Optional)
If you don't want to manage the property yourself, consider hiring a property manager. A good property manager will handle day-to-day tasks that you couldn’t be bothered doing. Such as tasks include:
● Screening tenants
● Collecting rent
● Handling repairs
It will cost money but might be the best way to go. Imagine…while you’re out working on your golf swing, someone else is managing your investment.
Monitor Your Investment
Keep an astute eye on your investment. Pay attention to the rental income, expenses, and cash flow. If you have to — make the necessary adjustments. Maybe even hire an accountant to help you keep track of things. Make sure your investment is working for you and doing what it's supposed to do — make you money!
Making money with long-term rentals is not easy. But like everything, if you take the time to learn, it becomes easier. And if you put in the effort to learn this investment strategy… it can be a very profitable endeavor. If you want to build long-term wealth with real estate investing, then contact Temple View Capital to learn more.