If you’re new to investing, one of the most important things you can do to guarantee success and profit is pretty simple: educate yourself. You need to know as much as you can before you start buying up properties. Otherwise, you may find you’re holding investments that can’t perform the way you had hoped.
Smart investors surround themselves with professional partners. They pay attention to local markets and those they’re considering for the future. They always know their numbers and they never make decisions that fall outside their carefully planned investment goals.
At Action Properties, we love working with investors who are new to the field. Here’s a quick guide to get started and if you’d like to learn more, don’t hesitate to reach out to us for support. We manage properties and help investors with rental homes in Roseville, Rocklin, Loomis, Lincoln, Granite Bay, and surrounding California communities.
These are some of the things you need to know.
Establish Your Investment Goals
Preparation and planning are critical, and those things have to happen before you begin investing.
We recommend that you spend some time exploring how, when, and why you want to become a real estate investor. The market right now is competitive and moving quickly. If you’re ready to begin buying properties, go ahead and jump right in. If your investment goals require you to be more strategic and move a little slower, that’s what you should do.
Those investment goals are critical.
You need to have an established set of real estate goals. Understanding what you’re hoping to accomplish, what your timeline is, and what type of properties you want to buy will ensure you’re making smart decisions and moving forward in a way that sets you up for success.
For example, if you’re interested in short-term vacation rentals, you’re going to invest in a very different property than an investor who wants to focus on long-term single-family homes in HOA neighborhoods that will appreciate in value over 15 or 20 years. If you want to invest in properties in order to fund your retirement, that’s going to take a different approach than an investor who is interested in building generational wealth.
Decide what you’re hoping to achieve and prioritize your goals when you have more than one. This well-mapped plan will set you up for success and keep you from making impulsive decisions that don’t serve your needs.
Your investment goals should address why you’re investing, what you hope to accomplish, and even how you plan to exit from your investments. An exit strategy is an important part of what you earn and even experienced investors often forget to consider it.
Deciding Where to Invest in Roseville
Next, you’ll need to know where you plan to invest in residential real estate. Look for markets that have growing economies, increasing populations, and various industries. Roseville is an excellent market for rental real estate, and you’ll find a lot of opportunities here. Any market that you intend to consider deserves some research to ensure you understand what the tenant pool looks like, where the rental values land, and what you can expect from owning property there.
Understanding the nuances and trends of the local market is important before you buy as well as after you buy. This knowledge will help you price your property appropriately, market it to the largest number of potential tenants, and make the necessary updates and upgrades to attract those tenants.
You need to know who your tenant pool will be, what kind of vacancy times you can expect, and whether repairs and upgrades will be needed to attract the highest rental values and the best tenants. Study the market and talk to experts within the market because all this information will help you buy the right investment and prepare for how you’re going to rent it out.
In Roseville, always look for neighborhoods near good schools and local amenities like shops, restaurants, and grocery stores. Get to know your demographics. Consider whether a neighborhood is more likely to attract residents who need more space for growing families or retirees who are looking to downsize into low-maintenance living.
Deciding What Type of Property to Buy
Once you know where you want to invest, you’ll have to think about what types of property you want to buy.
Maybe a single-family home in an established neighborhood best fits your investment goals. Or, perhaps you’re interested in multi-family units in a small building. Perhaps you have an apartment complex on your mind or a short-term vacation home that you can use yourself when you want. Again – you’ll need to go back to your investment goals. You’ll also have to consider your tolerance for risk, vacancy, negative cash flow, and maintenance costs.
If you see the uncertainty of financial assets as being a basic part of any investment strategy, you’re probably pretty risk-tolerant, and you have some good options with any Roseville rental property. You can invest in a diverse portfolio with a mix of properties, funding sources, and maintenance requirements.
But, if the idea of a vacant property and no rental income makes you queasy, and you’re nervous about paying for emergency repairs, you’ll likely want to focus on a multi-family property where you have several income streams arriving every month with rental payments and you can rely on lower maintenance costs per-unit.
There are pros and cons to short-term rentals and long-term rentals. There are pros and cons to single-family homes and multi-family properties. The right investment goes back to your investment goals and what you’re hoping to gain in this acquisition.
How to Spot the Right Investment
The right investment property is aligned with your goals. It also has:
- A desirable location
- Well-maintained condition
- Financial advantages
Location always matters when we talk about real estate. This is true for Roseville rental properties as well, and it goes back to choosing where you want to invest. Be strategic in choosing neighborhoods and communities. Most of the tenants in the area want to be close to work, schools, and shopping. Walkable neighborhoods are more popular than ever, and people want to enjoy privacy and space while still feeling like they’re part of a community.
Tenants with children will be looking at school districts, so do a little research into the local schools before you buy. Look for a property that’s accessible and easy for commuters, students, and families. Buying something too remote will not necessarily be profitable because of the risk of a longer vacancy or a lower rental value.
After location, consider condition. Sometimes, it’s tempting to buy a fixer upper. After all, the price is usually lower than others on the market, and some investors like the idea of putting your own personal renovations into the property. But, remember this isn’t a home you’re living in yourself. It’s a rental property, and you’re going to want to collect rent as soon as possible. Buying a home that needs a lot of work means that you’ll have to spend a lot of money getting it ready for the rental market.
New investors can’t afford to wait, typically. You need to begin earning income right away. Look for a well-maintained property that tenants will find attractive and appealing. Have it inspected before you buy it. Talk to a property manager so you’ll know if any repairs or updates will be needed before you list it on the rental market.
Location and condition are critical when you’re choosing an investment property because it impacts how quickly you’re able to attract good tenants.
You also have to do the math. Take a look at what you’ll spend on it and what you can expect for rental income. Your property manager should be able to conduct a comparable market analysis that tells you what kind of rent you can expect. Compare this to the expenses you’ll face, including vacancy time, repairs, insurance, rental property taxes, and management fees. Make sure you’re comfortable with the cash flow that you’ll earn.
Work with a Roseville Property Management Company
Smart investors know that working with a professional property management company will likely deliver higher rents and lower expenses. If you’re experienced in managing properties and you know all the laws pertaining to landlords and tenants, you can probably manage your own home successfully. However, it’s time-consuming and it’s easy to make expensive mistakes.
A property management company does more than earn you better rents and returns; your property manager partner can also protect your investment, ensure you’re compliant with all state, federal, and local laws, and save you money on vacancy, turnover, and maintenance costs.
Most importantly, property managers can help you spot an investment that makes sense. When you partner with a management company, you’ll know what kind of earnings and expenses to plan for before you close the deal or even negotiate the purchase price. It’s extremely valuable to have this resource in your corner.
We’d love to talk more about investing. If you have any questions about real estate investments in Roseville, Rocklin, Loomis, Lincoln, Granite Bay, or the surrounding areas, please contact us at Action Properties.