Tips for Owning a Lucrative Investment Property

Investing in rental properties is an excellent way to earn passive income and supplement your retirement portfolio. However, it comes with many responsibilities and choices. Owners regularly face decisions about design, repairs, modifications, amenities, and marketing the property for tenants. To appeal to renters, landlords need to take their time considering these factors to maximize profits and minimize hassle. Today, Tee Cee’s Power Blasters shares a few tips to take your investment property to the next level.

Form Your Business

Before you jump into the investment property business, you need to ensure it is a viable opportunity for you. Look at the housing market in your area to see if you can afford to buy in areas that would be marketable. For example, real estate in Providence, Rhode Island have been going up, and currently have a median sale price of $373,000. Factor in what you can put as a down payment, and determine the monthly mortgage payment for that property. Then, look at similar rental properties in that area to see what they are listing for. Cross check it with the mortgage payment you calculated, and see if you stand to make any money. Don’t forget to factor in costs for repairs, water and garbage fees, and a property manager, if you choose to hire one.

If you’ve decided that an investment property is right for you, then you need to attend to some legal matters first. You’ll need to choose what type of business to operate as, whether it’s a sole proprietorship, partnership, corporation, or limited liability company (LLC). It may be more sensible to operate as an LLC, as your personal and business assets are clearly separated, meaning your personal assets are protected, and there are also a few tax advantages. Check into how to form an LLC in Rhode Island, then consider using an online formation service to guide you through the process.

Do You Need a Property Manager?

Avail notes that investors often decide whether or not to hire a property manager based on the cost of doing so. However, the extra money spent could be worth it in terms of time saved. Typically, experienced property managers screen potential tenants and find responsible renters. They may also handle the marketing, schedule inspections, and deal with other administrative issues. Hiring a property manager allows the investor to focus on more important things, such as building their business and increasing profits.

Renovate the Property

Due to the extensive range of potential renters, owners will need to consider who they want to attract and use their renovation efforts to appeal to that type of person. For example, building an outdoor BBQ area might be an excellent way to enjoy those pleasant Rhode Island summers.

For properties with a basement, HGTV suggests finishing it so your tenants can use it as a gym or entertainment area. Hire a professional to complete any upgrades instead of attempting them yourself. This will ensure the work is done properly and safely.

The cost of these improvements varies with the room's size and the quality of materials used. However, the benefits are often well worth the price. If you decide to add carpeting when you finish the basement, make sure to have the contractor install a subfloor to prevent it from developing mold.

Getting Repairs Done

Even if you decide not to renovate or upgrade your buildings, it's essential to finish all basic repairs. This includes fixing faulty electricity, plumbing, or other significant problems that may arise. You’ll also want to make sure all your kitchen appliances are in good working order. You can't expect reliable renters if your building's systems aren't working properly. In addition to repairs, regular maintenance can reduce the need to fix, upgrade, and renovate the property. Each year, review the following:

Inspect heating and cooling system Clean out gutters Flush water heater Caulk windows and doors Spray for pests in the spring and fall

If it’s an older property, it’s best to power wash the exterior, including any porch or deck areas, to give it a “just like new” appearance. Tee Cee’s Power Blasters can help you make the exterior of your rental property shine.

Listing Your Rental

To get the most out of a rental, it's crucial to price market it properly. Listing it on a few free sites once renovations and repairs are complete isn't enough to reach all potential tenants. To truly market your house or apartments, you must post ads on several websites and consider expanding to traditional advertising, such as newspapers, signs, and flyers. You can also list it with a real estate agent specializing in rentals.

Make the Most Out of Your Rental Property

Getting the most from your investment essentially involves keeping up with renovations, repairs, and regular maintenance, but this can be tricky for time-strapped homeowners. A property manager can help you bring everything together and keep your rentals operating efficiently.