Owning and operating your own rental business is a great way to break into the real estate market or set yourself up for a soft retirement. However, getting started is a lot harder than they make it look on HGTV. There can be quite a few unforeseen hoops to jump through when it comes to getting things up and running. If you’re interested in creating a rental business, here is a short guide on how to get started.
Start-up Funds
Like any other business, you can’t get the ball rolling without funding. You can take advantage of real estate loans to secure your rental property as it’s unlikely you’ll come up with the cash outright. Whether you plan on taking over an existing business or building a new one, traditional bank loans will work. However, if you plan on securing property in a competitive real estate market like the Northern California bay area, San Francisco hard money loans might be the best way to land a deal. Having a hard money loan will give you a significant negotiating position with a seller because your funds won’t sit in escrow, unlike a traditional mortgage.
Join a Club
Start attending as many weekly and monthly meetings related to rental properties as you can. Joining organizations is essential to building a network of people who can help you get to where you need to be. Since you’re new to the world of real estate rentals, it’s in your best interest to try to find a mentor in the club you join who can guide you on your journey.
Get Familiar with the Law
It’s essential as a landlord that you learn all of the laws surrounding rental properties because there is a set list of obligations that you’ll be expected to follow. For example, when certain things breaks on your property and are in need of repair, you are required to fix it within a reasonable amount of time. Failing to remove mold or insect infestations in particular could result in potential lawsuits and loss of income, so be sure to read up on all your legal responsibilities.
Market Your Property
Even if the demand for rental units is extremely high in your area, you should still market your property online. There are a vast array of rental and real estate websites online that can give your business the boost it needs to start generating income ASAP. Consider making a website for your company that includes a relevant blog section so you can fill it with important keywords to improve your ranking on search engines and gain more traffic.
Allow Pets
If you acknowledge the fact that 68% of Americans own pets, it might be smart to let your tenants bring their furry friends along with them. Not only will allowing pets broaden the diversity of your potential tenants, but it may also bring in some extra cash. Anyone who owns a pet is most likely expecting to have to pay for a pet deposit and in some cases additional rent. Of course, there are some drawbacks to allowing pets in a rental; damage to the property may accrue over time and you might need a special insurance policy. However, the deposit of your tenant should cover most if not all of the expenses.
Handle Business Online
Younger generations are heavily engrossed in technology and appreciate the ability to sign leases, pay rent, and communicate with their landlord online. Consider utilizing online rental property tools and software to handle basic correspondence and finances. Set up alerts for tenant messages on your phone for requests such as plumbing issues and general maintenance. Once your business grows and develops, you can start hiring property managers and turn those notifications off your phone.
Start Small and Grow Slowly
Your first property shouldn’t be anything too extravagant; start small with something like a duplex or a condo. It’s best to get your feet wet with a modest rental before diving head first into a multi-unit property or large house. Set up a system for credit checks and background screenings, and don’t feel like you have to settle or rush into an agreement with a tenant. After a year or two, if you feel like you have your bearings, start to consider expanding with additional properties.
If you use these helpful guidelines while your small business takes flight, you’ll be running a successful business before you know it.
