If you are reading this blog, you are ready for the real challenge of becoming a rich investment property owner. The path will not be easy. But, with the right guidance, you will be able to start investing in rental properties like a pro.
We will show you the five steps every future rental property owner should take in order to start making money in real estate. Do not waste any time and take the right path towards becoming a rich rental property owner.
Step #1: Set Your Mind on a Rental Strategy
In order to be productive and successful, you should like what you do. Thus, you should choose the rental strategy that suits you the best. Long-term or short-term rental properties are possible choices. The main difference between these rental strategies is that with traditional rentals, the rental property owner has less day-to-day management tasks as there is no need for a constant search for new tenants and maintenance of the property.
When talking about making money in real estate, short-term rental properties are a better choice for a rental property owner who is hungry for money. Higher income per night, however, means more work. Another thing that you should consider is that every city has its own short-term rental regulations for investing in rental properties. Consequently, make sure you check the local rules and regulations before investing in a certain investment property as you may end up with a serious headache.
Step #2: Consider the Optimal Rental Property Financing
Let’s say that you have made the decision to buy a rental property for short-term stays. Do not rush into searching and contacting potential property sellers just yet. First of all, explore your options for rental property financing. There are many options which include: mortgage loans, private money loans, hard money loans, etc.
If a traditional mortgage is the best option, it is crucial that a future rental property owner gets pre-approved. Being pre-approved allows a real estate investor to know how much he/she can actually spend on a property. Moreover, this brings trust in the seller’s eyes as he/she will be convinced that the future investment property owner will be able to afford the property and close the deal successfully.
Step #3: Use Real Estate Investment Tools
After you have arranged the rental property financing, it is the right time to start researching the best place to own a rental property. Finding a rental property is an important step in your business- one which can determine your success. That’s why you should really put effort into selecting the best place to own a rental property.
A real estate investor should realize that a location suitable for traditional rental properties might not be suitable for Airbnb rentals. Make sure that you choose the location according to the rental strategy you would like to adopt. For Airbnb rental properties, focus on top tourist/ business destination points. At the same time, make sure that you focus on areas with high economic and job growth for traditional rentals.
But, how can you make sure that the location you choose is profitable? The answer is simple- use real estate investment tools, specifically Mashvisor’s rental property calculator. This real estate investment tool will present the best place to own a rental property. The findings are based on real estate metrics, such as occupancy rates, CoC return, cap rate, etc.
Learn more: How Data Makes Real Estate Investors Rich: A Mini Guide
Mashvisor’s rental property calculator does not only show you the best neighborhoods for investing in rental properties but also helps in finding the best rental property in any neighborhood. Such real estate investment tools select the top rental properties based on the criteria set by the investors.
Moreover, finding a rental property using Mashvisor’s rental property calculator will not take much time at all. In a few minutes, you will have the results of potential income properties and that is how to get started in real estate.
Try these tools out for yourself here.
Step #4: Buy a Rental Property
The process of acquiring a property is not as simple as it may sound. Becoming a rich rental property owner means owning the best rental properties. However, when looking for the best income properties, you will face some tough competition. That is why you need to know how to stand out from the crowd of potential buyers and how to negotiate the best possible price with the property seller. If you do not have experience in negotiating and buying a rental property, you might want to review the option of hiring a real estate agent who will represent you.
Step #5: Upgrade and Rent It Out
Congratulations, you are now officially a rental property owner! However, to become a rich rental property owner, you need to do some extra work on your property. The better the condition of the investment property, the higher rent you can charge your potential tenants. Nevertheless, do not spend too much on upgrades as, typically, potential tenants do not expect something luxurious. Additionally, making luxury upgrades on your investment means you need to increase the rent. Most tenants may not be able to afford that so keep it simple and well maintained.
So once renovations are complete, it is time to list the property. Try different methods of advertising to speed up the process of finding tenants.
One last thing to mention: Being a rental property owner of only one investment will hardly make you rich. Therefore, do not stop with one rental property. Invest in other properties following these five simple steps. Additionally, differentiate your portfolio and consider investing out of state. This is key when planning how to get rich in real estate.
Learn More: How to Buy Multiple Rental Properties in a Single Year
Becoming a rental property owner is not hard once you focus your efforts and follow the needed steps. Remember:
- It all starts with choosing what strategy you are going to follow.
- Do the administrative work and get pre-approved for a mortgage.
- Choose the right real estate investment tools to select the best location and property.
- Make sure that you are the person who gets the rental property.
- Make some repairs and rent it out to tenants.
- Rinse and repeat!
Want to become a rich rental property owner? Follow the steps!