6 The Dos and Don’ts of Investing in Real Estate Rental Property

 There are a lot of reasons in invest in rental property. They can provide a steady income in a slow housing market. They can help build equity in a retirement of vacation home. They also allow first-time buyers to enter the market.

Before investing in a rental property, have realistic expectations. Do not expect a quick profit, since rental properties are typically a long-term investment.  Resale prices are usually based on incoming revenue, not on home prices.

With that being said, it is important to know your market. Normally it is wise to buy a rental property in the nicest neighborhood you can afford. Important facts like school districts, proximity to public transportation, employment rate and crime rate are good to know.

The character of the neighborhood is key as well. Certain types of properties will have different sorts of tenants. For example, a duplex in a cozy family-oriented neighborhood will receive less turnover or wear and tear than in a college neighborhood.

It is also important to be patient. If you price your property too high you could lose money because of vacancy. If you price it too low, you could lose money overtime. It may be wise to consult a fellow professional on the matter, who can help weigh the trade-offs in a particular circumstance.
Once you find a property, it is essential to find quality tenants. Bad tenants will damage your property, run up maintenance costs and if they abandon your property, leave you with a vacant property that is losing money. Good tenants provide a predictable, steady income and take good care of the property.

Having a reserve of cash in case of emergencies is good to have. This can help with vacancies and maintenance issues as they occur. Rental properties also require a higher down payment than other residential properties. Keeping this in mind can ensure smooth transitions when between tenants.
Another issue to consider is lining up a network of professionals to help maintain the property. Finding a cleaning staff, contractors and other maintenance personnel that are efficient and trustworthy can save both time and money in the long run.

While considering investing in rental property, it is vital to keep these factors in mind. Taking the time to know the market and area in which you are investing can lead to less headaches and more success over a period of time.