Starting a long-term rental property business is an excellent investment. Getting started takes a lot of financing and planning, but the return on investment is more than worth it if the properties are managed well. It will take partnerships, investing, financing, hiring management and staff, and staying on top of management responsibilities. We will go into more detail on these topics, so enjoy the information.
Begin Networking
It would be in your best interest to join a networking club to provide opportunities that are harder to find if you’re flying solo. You can learn the process over time, take all you know from the pros, and implement it into your business. Entering a club will give the experience needed to operate efficiently in the future.
These club members are there to assist beginners in business. They all started from the bottom and can give the best insight.
Real Estate is an industry that goes up and down, and the property is what makes you money. If the property is not in use, then you have no income. If you can find someone with experience in the business through networking, you can also start a partnership with some realtors who see potential in your start-up company.
Seek Financing
It will take a substantial amount of money to get started. The options are to start up with a partner willing to invest or go through loan companies or banks to get the start-up cost. You will have to have money to put down with the banks or the investor to show them you’re serious about the investment.
This primary start-up business plan will almost guarantee that the banks will lend the money. It is best, to begin with, one house or apartment complex. As you collect the rent from the tenants, pay off the loan quickly, so everything becomes profitable after the rental expenses.
Figuring out the cost of what you will charge the tenants will determine how long you remain in debt with the banks or loan companies. If you partner with an investor, you can buy out their share of the company once the agreed contract is up. This way, you can fly as the sole owner of the long-term rental property business.
Set Designated Money Off to the Side
It is critical to save money from the earnings if things break or go wrong with the rentals. The rest of the money can go to getting additional rental properties, and your business will grow from there. Follow the same steps with each property purchase, and you will be well on your way to having an empire because the sky is the limit on real estate rentals.
Once you get past the first one or two properties, it should be easy to purchase without borrowing if everything goes well. Of course, things may go wrong in Real Estate rentals, and saving money for those rainy days is critical.
Hire a Management Team
Managing the first few sets of rental homes or apartments is relatively easy. As your rental properties are plentiful, you will need a management team to help with the following:
- Repairs;
- Complaints;
- Service;
- Supervising;
- Paperwork;
- Other managing responsibilities.
Be In Charge and Take Control
Most big rental corporations have managers running the rental buildings. It is at the business owner’s discretion if they want to be the landlord or if they want to hire a manager. It will take a few years to get to this step because it takes time for the return on investment to build up.
The team you will be in charge of consists of a manager and a maintenance crew. Even though a manager is hired, you will still have the final say in all the business decisions. It is the perfect form of passive income.
Cutting the grass and cleaning the property is another option to add money to added services. Most tenants tend to the yard they rent, but some do not have mowers. These options can be filled in the contract at the time of the signing of the lease.
Promote the Rental Business to Get Tenants
Once you get set up with your first vacant house, there are several ways to draw tenants. If it is in a high-traffic location, putting a “For Rent” sign with your contact information is the way that catches most people’s attention.
Placing ads is another way to draw crowds to see who will rent the property. The information should contain pictures of the inside and outside of the home, the property, and anything significant that would draw tenants to the property.
It should also have the size in square footage, how many bedrooms and baths, address, amenities, contact information, and monthly price. These are the spots where you can advertise:
- Previous renters;
- Rental websites;
- Direct mail campaigns;
- Social Media;
- Word-of-mouth;
- Newspapers/print media;
- Bulletin boards;
- City Hall.
Successful Rental Properties Are Made This Way
As you grow your long-term rental property business, there are some things to consider before you purchase the property. In most cases, it will alter the price you can get for rent. For example, if the location is like a ghost town with nothing around it, it will feel like a camp more than a home. It won’t make you as much money as a place in the city area.
These are some other things to consider:
- Schools;
- Taxes;
- Economy;
- Employment;
- Local businesses of convenience;
- Safety;
- Vacancy and Rental Rates of the Competition.
Sources
https://www.newfoundr.com/how-to/start-rental-property-business
