There are countless things that a rental property investor needs to work out to make that first single-family rental home a success. By putting in the time to pick up the nitty-gritty of rental property investing before venturing out into the Locust Grove market, an investor can gain a significant advantage. By learning about the five key things that rental property investors need to know, you can quickly get yourself on the path to property investing success.
1. Plan Ahead
Investing in Locust Grove rental properties consist of a considerable amount of up-front planning.
Digging into the real estate market without a clear idea of what your objectives are and which measures
you need to apply to get there can leave you unproductive and overwhelmed. Draft your goals by
writing down your objectives, and the requirement is that it has to include a long-term investment plan.
For instance, you might ask yourself queries like: Are you more concerned about long-term appreciation
or cash flow? Are you planning to occupy the property at any point, or is it purely an investment? If your
goal is to generate $5,000 a month in retirement income, you’ll need a clear strategy and a multi-year
plan to get you there.
You will also need a clear plan to produce the funding you need for ongoing expenses. Other than the down
payment and closing costs, there are operating expenses, property taxes, insurance, and other costs that
must be paid each month.
Even though the idea is to design your rental property with hopes that your rental income covers both
your mortgage payment and these costs, that may not happen close to what you want it to be. There
will be periods where you experience a negative cash flow due to vacancy, large repairs, or other
unexpected expenses. One alternative to preparing for the unpredicted is to set aside a percentage of
each month’s rental income into a separate “contingency fund” account. That way, you’ll never be
caught without cash on hand in a critical moment.
2. Understand Risk vs. Return
In the rental real estate market, there is a positive association between risk and return. Investing in real
estate is a moderately low-risk option for investors. By the by, there are still risks associated, and the
usual case is that the highest returns only come with the highest risk. Most of the time, rental homes in
less expensive neighborhoods present the highest potential yield but are also riskier because of the
inherent volatility of such areas. More expensive neighborhoods, then again, may not have that volatile
nature but will be a much higher up-front investment and will cater to a much smaller percentage of
renters. Deciding where your investment comfort zone is in advance can help make your property
quests much faster and more effective.
3. Know Your Renter Demographic
Together with property type, you’ll have to choose in advance about who your target renter is. It is
common sense that not all rental homes will appeal to all renters. For example, Millennials and young
professionals tend to have varying preferences and standards from what other categories of renters have. Try to look at prospective rental properties through a renter’s eyes and see whether you can
discover which set of tenants it might appeal to most. Once you know who the renters are in your
market, you can shop for a property with their needs in mind.
4. Organize Your Business
Investing in rental properties is a business. Separating your investing from your personal life is an
important part of making sure you have the systems you need in place for long-term success. For
example, at a minimum, investors should have a separate bank account for their rental property
business, as well as a money management app or software to help them keep track of it.
Make sure to categorize your expenses, especially if you have more than one rental home: you’ll need
individual income and expense numbers ready for each property once tax time rolls around. Documents,
invoices, and other paperwork should be organized into folders, either digital or on hard copy. This can
make finding information much less of a headache.
When setting up your business, remember that you are the CEO. That means that you’ll need to have a
system in place to delegate time-consuming tasks to a team of trusted professionals. A property
manager, real estate agent, and a lender are essential. Most investors also have a lawyer and a trusted
contractor or two on their team as well.
5. Adjust Your Outlook
Maybe the most significant thing to find out about real estate investing is that it is a marathon, not a
quick rush to the finish. The profits will come, but only if you remain diligent in the long run. It
won’t always be sunshine and earnings, yet with patience, information, and a solid strategy, you can
overcome any market fluctuations and emerge prosperous in the end.
While nothing can help a rental property investor more than experience and information, having the
right support could be a game-changer from day one. At Real Property Management Anchor, we help
investors negotiate the challenging terrain of Locust Grove property management. Our systems and
innovative approach to property management ensure that once an investor has taken the first steps into
rental property investing, the many years of ownership to come are as steady and profitable as possible.
Contact us or call us at 770-506-1237 for more information.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
