When you’re renting out a property for the first time, there’s a lot to look forward to, especially consistent rental payments and long-term returns on your investment. However, to ensure a profitable investment experience, you have to set yourself up for success. Here are the top 10 core considerations that you need to have in place before you get started.
We know it can be overwhelming. But with good planning and a network of experts ready to help, you’ll find it’s not too hard to get started.
1. Get to Know the Roseville Market
You have to do some research on the Roseville rental market before you invest. It’s especially important to know the market when you’re ready to rent out your investment property. This will be important for pricing your home, marketing it to prospective tenants, and making upgrades and updates that will attract good tenants. You have to know what competing properties offer and what good tenants are looking for in a home.
2. Set a Competitive Rental Value
Your rental price will impact your vacancy time as well as the tenants you attract. It’s important that you don’t undervalue your rental property, but you also don’t want to over-price it. Conduct a market analysis so you know what homes similar to yours are renting for in the Roseville area.
3. Make Business Decisions, Not Personal Decisions
Real estate can be pretty emotional. After all, we’re talking about homes. However, when you begin to invest in rental properties, you have to focus on making business decisions, not personal decisions. This investment is a business, and you need to treat it as such.
4. Craft a Strong Lease Agreement
The lease agreement should protect you, your property, and your residents. Make sure it includes all the necessary disclosures and clauses. California is pretty detailed in what a lease agreement must include, so don’t download a basic template that you find online. Get a sample lease from a property manager or a professional organization. Cover everything from rent collection policies to maintenance requests to move-out procedures.
5. Tenant Screening and Placement
One of the biggest mistakes we see new investors make is incomplete tenant screening. This requires more than a credit check. You want to collect a detailed application and verify all the information that’s provided. Check the national eviction lists and talk to current and former landlords and property managers who can tell you whether rent was paid on time and the property was taken care of during the lease term. Verify income so you know rent will be paid on time. The tenant you place has a huge impact on your investment experience.
6. Encourage On-Time Rent Collection
Create, implement, and enforce a consistent rent collection policy. It should be included in your lease agreement and you should discuss it with your tenant before they move in so you can be sure all expectations are understood.
Make it easy for tenants to pay their rent. Many residents today prefer to pay online or electronically. Facilitate this for your tenants as best you can.
7. Focus on Tenant Retention
Turnover and vacancy are expensive. Many new investors forget to factor this expense into the cost of renting out a Roseville home. The best way to avoid this cost is by retaining your good tenants. Responding to maintenance issues right away, keeping communication open and transparent, and providing a great property are all good ways to encourage your tenants to renew their lease agreements. Be reasonable with rental increases and offer incentives to keep them in place.
8. Protect Your Property with Insurance
Real estate investments can be profitable but they also carry a lot of risk and liability. Make sure you’re protected with a strong landlord insurance policy that provides enough coverage for rebuilds, replacements, and liability. You want to make sure you’re covered for any loss of rent as well.
Tenants should have renter’s insurance. This protects their private property and also adds a layer of liability protection for them if they cause a problem such as a fire or a flood at the property.
9. Accounting and Documentation
Invest in good technology so your accounting processes are streamlined, accurate, and detailed. You’ll want to document everything from property condition to income and expenses. A good system will not only keep you organized, it will also protect you from easy mistakes and miscalculations.
10. Professional Roseville Property Management
The best way to ensure a successful and profitable investment experience is by working with professional Roseville property managers. We can help you keep your income up and your expenses down. We’ll also keep you in compliant with California’s ever-growing list of legal requirements for rental housing.
If you’d like some property management support as you begin your real estate investment career, contact us at Action Properties. We’d be happy to help.