We have been investing in properties for a a few years now. We’ve gone about it on a very conservative level though, playing it safe. We’re not “flippers” per say, although if we saw the right opportunity, we’d still jump on it.
We’ve been investing in rental properties for a few years and have collected a few of them. I have noticed that we go about it differently from most though, so I wanted to share a few things with you, in case you’re considering getting into real estate investments. Mind you, people invest in many different ways, so these are by no means, “the rule”, this is how we choose to do it and have been successful with it. I want to share what we’ve done.

  1. When searching, look for the home that is cheaper than the others around it. This is the ONLY time I will ever say to look at the price per sq ft to compare. In our MLS, we can do a color coded search to show you where the more affordable homes in the neighborhood are. These will be the best buys for the area.
  2. Find something that needs a little ‘love’. Homes that need work will sell for less and will sell slower, giving you an opportunity to get a good deal. Yes, you’ll put the money back into it by replacing flooring, painting, redoing the fixtures, but it will pay off in the end.
  3. Avoid homes that have marketing issues such as backing a main road, or being too close to one, power lines, train tracks, commercial buildings, apartment complexes etc. These homes will have built in deterrents, cutting into your target audience.
  4. Avoid HOA’s. First of all, HOA’s can make your life difficult if you aren’t living in the home. Every time your tenant doesn’t pull the weeds immediately, you’re getting hit with a fine. They will cut into your profit margin monthly and annually with fines.
  5. Watch out for problem child homes… Homes with pools, flat roofs, 50yrs old, etc will have higher costs for insurance and may give you a head ache in maintenance, all of which will cut into your profit margin.
  6. Keep it small. People will always rent larger homes too, and if you have $400k to spend, go for it… However, the market is telling us that the Millennials are keeping it simple. They want the smaller homes, close to downtown. They want easy to maintain, and easy to commute. Personally, I like to keep my rentals small, to limit the number of people that can live there. The smaller, the better. Remember, city ordinance says occupancy is about 2 people per room, and the fewer people that touch the home, the less of a mess will be made.
  7. Who will you rent to? Jobs in the area, commute times, ease of access, neighboring schools and for that matter, neighbors…. all are things to consider, when you want a good, reliable tenant. If you were looking for a rental, and were willing to pay top dollar, would you want to live there? Where would you work, what are your hobbies? Keep in mind, homes close to a college will likely demand 3 roommates going to college. A home next to a high paying tech office, COULD yield a high paying executive that lives alone and works 80hrs a week… there’s a great tenant to have there! Keep in mind, there are some that relocate and rent for a year, others that just need a place to rent while they finish school. Look for homes in an area that will keep your tenant happy for years, to avoid the ‘turn around’.
  8. Always have a minimum of 1.5 baths. In all my years in real estate, I’ve never met a renter that wanted 1 bathroom. They always want at least 1 bathroom for guest. If you only have 1 bath, expect to net less in rent and have a much smaller pool of tenants.
  9. Dress it up. The most important thing you can do is make your rental NICE. Most people that are looking to rent will settle for something, true. BUT, by giving your home something to make it stand out, ie, nicer kitchen, upgraded fixtures, nice paint and flooring etc, you will attract a tenant that is willing to pay more to have a home they can be proud of. Those tenants also often have more pride in their home and maintain it better. If your property has something about it that makes it unique to the other homes on the market, you can command more, and you will get it.
  10. Be a good landlord! Ok, that’s not part of finding the right home, or even how to get it rented for top dollar, but I will tell you this… We value our tenants. We have ensured that they love their home… as they should. If there is a problem with repairs, the roof, the AC, insects… anything we can help control, we are on top of it as soon as possible. Why? Because it’s someone’s HOME…. and because we want to make sure our tenants are happy, and stay. A loyal tenant is priceless and if you ask them, a good landlord is worth their weight in gold.

Obviously, I’m a strong believer in real estate investments, but every one’s situation is unique… There are options for you when investing.  Some will have cash, or ways to leverage their investment accounts or life insurance. Some have no money to put down, but want to look into investing some day. Some people have the money to put down, but don’t know where to begin.  Some people want a long term tenant, others want to run a VRBO…

No matter what your situation, if you think that investing in real estate is an option you’d like to explore, lets talk. Don’t wait 20 years to say you wish you did it back then. Start now and in 20 years, maybe you’ll be able to retire off your decisions made today!

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