One very popular form of property investment is acquiring real estate and renting it out, which provides you with a regular income. Some might even say that your tenants are paying your mortgage, although the property owner does have considerable expense to maintain said property. Nevertheless, there is profit to be made and in this short article, we take a closer look at the rental property market.
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Create a Business Plan
The rental property business is much like any business; you need a plan, a comprehensive plan that covers every aspect of the operation.
It is only by doing this that you can discover your expected returns and also to gain a deeper understanding of the problems you might encounter and strategies to overcome them.
What Does a Good Business Plan Contain?
A well-thought out business plan would include:
- Overview of the business (acquiring property and leasing it to tenants)
- Building maintenance
- Marketing
- Legal aspects & compliance
- Capital requirements
If you need some help, why not make contact with a local business coach? He/she can assist in the business plan and offer a professional opinion on your operation.
Property Acquisition
Of course, location is everything when looking to acquire rental property and most investors prefer to buy a rundown house for a cheap price and carry out renovations.
Find out what properties of similar size are fetching in terms of rent and that should be your guide for financial planning.
There is affordable real estate agent insurance that mitigates risk and regarding the type of accommodation you offer, there are numerous options, you could, for example, buy a large detached house and divide it into apartments, or you could invest in apartments; another option is to appeal to the high-end market, corporations rent upmarket houses for their directors and visiting management; while low-cost housing is another market entirely.
Property Management Companies
The property management company is designed to support your business; they offer numerous services, such as:
- Sourcing & screening tenants
- Building maintenance
- Security
- Legal advice & services
- Collecting rent
- Drafting tenancy agreements
- End-of-tenancy work
It is important to join forces with such a company, especially if you plan to expand the business with more property acquisitions. They take the strain away and while it is an expense, we think it’s a necessary one.
Forge an Alliance with a Local Builder
This is an essential partnership, as you will call on your builder to renovate newly acquired properties, as well as carrying out essential maintenance.
A reliable contractor with a high standard of workmanship is ideally what you are looking for in a builder, which won’t be too difficult to find.
We hope this article enlightens you somewhat as to the inner workings of a rental property business, which could turn out to be a very wise move.