How to Find a Good Rental Property Agent

If you are new to rental property investing, the first person you will need on your team is a real estate agent. A good real estate agent is the most important person on your team because he/she will be the one that:

  • Makes you aware of what rental properties are available for sale, and coordinates the showings.
  • Helps educate you on the details of the business as it relates to the local market (the best streets in the neighborhood, advice for handling tenants, etc.).
  • Provides referrals of professionals you will need as your investment activity progresses.
  • Coordinates the buy & sell transactions, including all negotiating, closing requirements, and associated documentation.

Requirements of a Good Rental Property Agent

You’ll want an agent that specializes in investment properties because this segment of the market is dramatically different than the primary residence segment. First and foremost, the negotiating strategy is different. For example, investors are generally more patient than homeowners in terms of waiting for the best offer, as they are bringing in rental income. Therefore, the sense of urgency is lower than for someone who, for example, must sell his home due to job relocation. Similarly, much of the emotional element of the transaction is eliminated when buying or selling rental property, because in these cases the numbers are king.

Rental Property Management – It Will Make Or Break Your Rental Property Investment Business

Don’t get freaked out about the term “rental property management”, it sounds threatening but all it really means is:

A game plan to keep your rentals headache free, cash flow animal .

Does that sound a little better than rental property management?

You better believe it does and guess what. Managing rental apartments is simply a matter of having the proper mind set and doing some planning in advance.

I don’t care if your talking about one two family property, a six unit property or twenty rental properties, having a game plan for managing your rental units is key!

Before I go any further, you should know that I always manage my own rental units. The most I ever had was I believe 42 units comprised of 2-6 unit buildings. I would never have an outside property management company manage my properties. It costs too much, they do a lousy job in my experience and its easy to get ripped off. I knew a roofer who had a gig set up, where he would give a kick back to the guy in charge of getting bids for a property management company!

Learning whats involved ahead of time for managing rental houses will save you a lot of time and aggravation.

Your rental property management plan has to cover:

  • Who is going to do the basic maintenance repairs, i.e. clogged sink or toilet, broken facet, doorknob, window, electrical plug not working, etc. Are you going to do any basic maintenance? If not, you’ll want to find handymen that won’t break the bank. How do you find these guys?
  • Will you be able to financially handle more severe problem, such as roof leaking, need to replace a hot water tank, need new furnace, vacancies…
  • How to screen tenants. After all, they are the source of your profit center.
  • How to manage your tenants so that their personal/financial problems are not your concern.
  • When someone moves out or you evict someone, who is going to prep the apartment for the next tenant.
  • Speaking of evictions, do you know how to do one? How much does it cost? How long does it take?
  • How to adapt the proper mindset for successfully owning rental property.

You have to have a property management plan that works for you. This is key. You see, some people are white collar, some are blue collar, some are hands on, some can’t and don’t want to know how to turn a screw driver, every bodies situation is different. Understanding this and having a system to manage your property will keep your rental property a cash flow animal.

Let me rephrase that. Having a property management plan that works for you will keep investing in rental property headache free and running like a well oiled machine.

Having your rental units be a cash flow machine is a primarily a function of buying the rental property at the right price. However, even having bought a multifamily house at the right price, you can end your rental property being a cash flow animal without a good property management plan.

Remember, a good rental property plan will

  • Help you find good paying tenants who won’t do much more harm to your apartment than normal wear and tear.
  • Allow you to charge top rent because your apartment warrants it.
  • Make sure things get fixed quickly and cost effectively when needed.
  • Keep your tenants happy, so you don’t have frequent vacancies due to poor property management.
  • Make owning rental property stress free.

Understanding what a rental management plan should entail and implementing it will make your rental property business enjoyable and successful.

Ten Tips For Buying Rental Properties

Buying rental properties is a good way to increase your assets. However, choosing the right rental property will be challenging. Here are a few things to check for prior to buying rental property.

1. Location – Most people don’t want to live in the boon docks. The location of your rental property will determine how easy it will be to rent. If you have a lot of vehicle traffic, you may receive a greater response from a sign at the location than you will from a newspaper add.

Tenants want to live in nice neighborhoods close to all the amenities. They want to be close to the schools, stores, recreational locations, hospitals, and work.

I haven’t met anyone who wants to live in an undesirable neighborhood or drive 15 minutes for a gallon of milk.

2. Numbers – When buying rental property you want to check the numbers. Make sure you have all the expenses associated with that property and make sure it still has a positive cash flow.

Take into consideration the maintenance issues, any utilities not covered by tenant and amortize the cost of the big projects like furnace replacement, new roofing, siding or landscaping.

3. Lower Maintenance Buildings – You want to avoid homes that will require expensive routine maintenance. Some examples would be homes that have cedar-shake shingles or siding, wood sided buildings, wood frame windows, brick driveways, cedar decks, etc.

4. Higher Home Prices – Check in towns with higher home prices, because this increases the demand for rental property. Look for the ugly house on the block that has a lower price, enabling you to purchase within the margins.

5. Below Market Rent prices – When buying rental property, look for rental property which has rent prices that are below current market rents. This will allow you to raise the rent and increase the value of the property. As per above, this may just need a little fluff to enable raising the rental price.

6. Good Rental History – Whenever buying rental properties, you must check the rental history. Check to see on average how long tenants are staying and do they pay their rent on time. Some areas of town are naturally quick turnover times. Near airports, loud bars or nightclubs, near military bases, etc.

7. Complies with Zoning and Fire Codes – Make sure you check to see if there are inspections required by local officials for rental properties and does this property pass those inspections. You never know the real reason the current owner is selling the property.

8. Less Than Twenty Years Old – This is self explanatory, if you restrict your selection to buildings that are less than twenty years old, you will limit the chances that the building will have any building code or maintenance problems.

9. Out of State Owners or Managers – When buying rental property, look for properties that are owned by out of state owners. It is hard to manage rental property from out of state and when these come up for sale, the owners are usually more concerned with selling quickly than getting top dollar.

10. Neighborhood is stable or improving – obviously avoid neighborhoods that are declining, look at the writing on the walls and stay out. Although these may look good due to the low purchase price, they are very difficult to collect the rents.

By finding neighborhoods that are stable or improving, it will be easier to rent the property and you will be able to increase the rent. The general consensus is, the better the neighborhood the higher the purchase price and the higher the rent prices, therefore the margin for profit is greater. The poorer the neighborhood the lower the purchase price and lower the rent prices reducing the profit margins.