Real estate can be very rewarding and be a great investment no matter what path you take. This will explain several concepts you must know to be successful with rental property. You can also lose in real estate as we have all seen in the recent economy around 2007 to the present. Knowing the fundamentals and becoming more knowledgeable can make the difference between winning and losing in real estate.
Here are 5 essential tips that are the basic key concepts to understand with rental property.
1) Low Maintenance
Keep this in mind for the long-term success of your property. Have a low maintenance yard with gravel, wood chips and plants that require little effort after the roots take to the soil such as phoenix roebelenii, sago palm, king palm and queen palm. Low or no HOA (home owners association) monthly fee. Carpet and tile that will not show dirt and usage well.
2) Know the Area Well
Before you buy a rental property know what you're getting into. Know what a good price for that area is, if that neighborhood is improving or declining, will the surrounding neighborhoods appreciate or decline your property, what can you get for rent and does this make sense with your mortgage payment are a few questions in the process you must take to having your investment being well thought out.
3) Good Qualities of a Tenant
It is important to know what good qualities to look for in a potential tenant. These include honesty, a good source of income and stability to name only a couple of the good qualities in a tenant. Listen carefully to find the good qualities in potential tenant. A lot of information can be gathered by simply asking a few questions and listening while they talk to you. Ultimately, you want a good person who will take care of your house and pay rent on time.
4) Red Flags for Prospective Tenants
Knowing what to avoid in a tenant will make the difference between collecting a check each month or calling an eviction company. Bad credit, an existing short sale, low bank accounts and large up front money are only a few of the red flags to watch out for.
5) Finding Tenants
Craigslist.com is the best place to find renters. Bulletin boards and word of mouth can work sometimes but on a very low magnitude so do not rely on this. If you have the time you should post on Craigslist.com and show the house yourself instead of a management company to find the best tenant. Qualify potential tenants over the phone to save each party time if you know it will not work out. Ask how many tenants and what occupations. In addition, ask what their credit and debt is like including credit score, credit card debt and bankruptcy.