Some Significant Dos and Don’ts of Selecting a Rental Property

Hey folks! Are you looking for a rental property? Do you want a profitable deal? Read on the whole article for selecting a good rental property. Here, I am writing to you some dos and don’ts you should keep in mind all these points for making a profitable deal.

When it comes to profitable investment, the first thing comes into mind is real estate property. Real estate investment can be profitable for you if you choose the right property. Before buying a property, vigilant research on the property is significant. You should have knowledge about property deals and rental agreements. Renting a property could be dangerous if you have not educated yourself before entering into an agreement.

To become a victorious landlord and earn a good profit from your property, you need to take some savviness, research, and hard work. If you do not get the right information, you might get into a problematic agreement. Have a look at dos and don’ts.

1. Do

Avoid Repair Cost

You may find some rental property that requires minimal repair. But it might be an unprofitable deal due to the cost of a fixer-upper. Try to avoid such types of properties. You may get into a fruitless rental agreement. Such type of fixer-upper might look small but, the expense could be unexpected. You need to save money on these repairs. If the property requires a few repairs then, it is ok to get that property. But sometimes you bump into unexpected expenses. So, try to avoid such deals. You should buy the properties which have a few repair expenses.

Don’t

Get into an Expensive Repair Deal

Some repair deals might look easy and economical but that fixer-upper can make you poor. These days we have seen in some reality shows that repairs are easy, economical, and fun-loving tasks. But it is not like it seems. If you do not have a professional and skilled contractor this glamor can give you a tough time. You might get out of the pocket due to the repair costs. That repairs are floor fixing, plumbing issues, and termites in doors or windows. Such types of repairs are expensive. So, do not buy a property which needs such type of repairs.

2. Do

Find the Right Neighborhood for your Property

When you want a good profit from your rental property, you need to look for profitable demographics. For example, find a property around the college, university, and offices. A metropolitan area can give you a high return on your rental property. The rates of the property which is near young professionals and students are usually high. Look for a neighborhood that has a public transportation facility, restaurants, grocery stores, malls, and public parks. These places can increase your property’s rent.

 

Don’t

Make a Decision without a Pre-Research on the Neighborhood

You need to be careful while choosing your neighborhood. Once you select your surroundings, you cannot change it later. However, vigilant research is significant about the location and its neighborhood. Before buying or renting out a property, think about the location from the tenants’ point of view. Think about the facilities and comfortabilities you should have if you live here. If you choose the right location for your rental property, it will give you a high return. Tenants usually make no compromises on the location and neighborhood, but they do compromise on the repairs.

3. Do

Look for an Updated House

The outdated house cannot give you a potential return. Tenants usually want a property that is updated and has all the facilities in it. Fixing some repairs can give you an expensive deal. So, try to buy a cosmetic and updated house.

Don’t

Ignore Big Issues of the Property

Some houses have unignorable repair issues. Do not ignore them. Ignore such types of properties. As they will not let you earn potential profit from it.

Step-Wise Process to Find Real Estate Deals

Finding real estate deals is a difficult process but if you consider it as a funnel, you will be able to get hold of the concept and the complexities involved in it a bit more conveniently. We call it funneling because it starts with putting in a lot of raw leads, and the ones that get out from the bottom are quite lesser in number. But, those are the ones we can surely rely on.

So, what that funnel really is? Let’s find out.

Raw leads

The business persons, whose job is to get the deals closed, would probably have much better idea about getting the raw leads. There are a lot of ways we can get raw leads. Raw leads may include persons, along with their contact info, who wouldn’t have any intention to buy or sell the property. Still, that dispensable one is counted as lead as long as it stays in the list of raw leads.

To get the leads, there are software programs available that are programmed to search through specified domains quickly and create lists of leads.

Hot leads

Hot leads are the ones that respond to your marketing efforts. For instance, you have got 1000 raw leads. Now, you send your promotional email to all of them. Then, 50 from them respond to your email. Those 50 are the hot leads.

Here, you need remember that not every hot lead is your most likely business prospect. Some of them might not like to continue after getting further details. Some may not have good property location or value, making the leads non-workable for you.

Nevertheless, it is certain that many of those hot leads would take interest in investing in your business.

Analysis

After you have the hot leads, now is the time to analyze them. Out of the 50 hot leads you have, you might be able to analyze only half of them. During the process of analysis, you try to calculate cash flow, cash on cash return, and total return.

After the analysis, you might find out that most of the properties you analyzed aren’t really offering you much in return. For instance, there may be some properties for which the sellers may demand $200,000. But when you would analyze that lead, you might find out that total worth of that property is just $50,000.

Hence, you might get only a few workable leads after the analysis.

Making offer

Now when you have analyzed the deals and filtered the ones that are workable, it is the time to make an offer.

Getting the offer accepted

Now there is a little heads up. Not every offer that you make is going to get accepted. But, it is not a bad thing after all. If you are offering too much by inclining towards the seller or buyers in a way nobody does, you might get the offer accepted but you are basically making a compromise over your own business rule. So, rejection is necessary to get the future offers accepted.

Closing the deal

The reason for mentioning closing of deal as an end of the funnel is that even if you have got the offer accepted and the seller is ready to sell you the home, there may be some obstacles left that can end a deal without closing. For example, the seller have agreed to sell you the home but you found out at the last moment that there are several mortgage payments left, you are definitely not going to like to proceed with the process.