Choose what to commit to and what not

When it comes to becoming a landlord of a rental property, there are various approaches you can take, ranging from actively managing the property yourself to hiring a property manager to oversee a property you’ve never laid eyes on.

Before making any decisions, it’s essential to consider the amount of time and money you’re willing and able to devote to a potential rental investment, as well as the market you’re interested in entering.

For those who have more time than money, a fixer-upper property that can be renovated with inexpensive DIY projects and brought up to market value may be a viable option.

However, for those who have the capital but lack the time, purchasing a turnkey property and hiring a property manager to handle the day-to-day responsibilities may be the preferable choice.

According to Alonzo Johnson, the tenant association president at a property owned by Emerald Equity Group in East Harlem, New York, viewing tenants as partners in a symbiotic relationship is important. Providing quality housing and maintaining a certain standard of living is the service landlords offer, and tenants pay for it.

But with the current rising mortgage interest rates and increasing property prices, investing in real estate may be out of reach for many individuals, and alternative investment opportunities should be considered.

[/vc_column_text]

Make sure you can handle a financial storm

Investing in real estate can be a lucrative venture, but it also comes with unique risks and challenges. Maintaining a property can be costly, vacancies and unreliable tenants can impact profits and even affect your ability to pay your mortgage. Therefore, it is essential to evaluate your financial situation and plan for unexpected events before investing in a property.

One crucial factor to consider is having enough money to cover any financial downswings. This could mean having a cash reserve or a credit line to fall back on if your property becomes vacant or if your tenant experiences a financial emergency and can’t pay rent.

If your mortgage is not sustainable without full occupancy and rent, then you may be putting yourself and your tenants in a difficult situation. It’s vital to build a cushion into your business plan to protect against any unforeseen circumstances that could make you vulnerable.

Nancy Neiman, a professor of politics who rents out an in-law suite attached to her garage to help pay her mortgage in California, stresses the importance of having flexibility and a cushion in your business plan. It’s essential to plan for obstacles that are out of your control, so you don’t become vulnerable to financial risks. Many real estate investors with large portfolios funded by loans may be putting themselves and their tenants in a difficult situation due to their lack of flexibility. Therefore, building in a cushion and having a flexible business plan can be crucial for success in real estate investing.

 

Understand the renter’s perspective

Interacting with real people is an inherent part of investing in rental properties. Treating tenants with respect and understanding can improve your chances of getting a reliable return on your investment.

According to Alonzo Johnson, the tenant association president at a property owned by Emerald Equity Group in East Harlem, New York, viewing tenants as partners in a symbiotic relationship is important. Providing quality housing and maintaining a certain standard of living is the service landlords offer, and tenants pay for it.

[/vc_column][/vc_row]