When you invest in a rental property, you have some ideas about what will be involved. You’ll work out your financing details and you’ll partner with a good broker to show you potential properties. Smart investors will consult with property managers about how much rent they can expect from a given property and what the maintenance costs are likely to be.
We want to go beyond those basics today and talk about some tips we have for savvy investors. If you’re growing a real estate portfolio, you understand the importance of continually educating yourself on the market and on the process of becoming a smarter investor.
Here’s how we can help. At Hoffman Realty, we have decades of professional experience, but we also have personal experience. We purchased our first rental property in the mid-1980s, and we’ve learned a lot over the years.
Tip: Buy a Profitable Investment Property. And Hold It
The first tip we have is pretty obvious – buy a good property.
Not only do you have to buy a good property, you have to hold onto it. This isn’t a stock investment. It’s not a government bond or a mutual fund. There’s a significant cost involved in buying and selling real estate, and those costs can quickly take over what you’re earning. The longer you hold onto a good rental property, the better your chance at building wealth.
Home values typically double every 10 years. Rents will typically double every 20 years.
Eventually, your tenants pay off your mortgage. Then, your rental income becomes pure profit.
These are significant factors that build your wealth over the long term.
Tip: Be a Good Landlord
You have people living in your property. Treat them with the respect and care that they deserve.
In our experience, good landlords earn more money. Their returns are higher because they are more likely to retain their best tenants. Those higher renewal rates help you avoid large turnover expenses and long vacancies.
Provide a great rental experience, retain your tenants, and you’ll find you earn more on your investments.
Tip: Treat Your Rental Property like a Business
Even if you’re only renting out one home, you’re running a business.
Treat it that way.
Don’t get emotionally involved with your property. You’ll need to set aside a reserve fund for those unexpected repairs and surprise incidents. We recommend a reserve that’s equal to six months of rent. Protect yourself and your investment so you don’t lose money, and make strategic, business decisions.
Tip: Work with a Tampa Property Manager
Smart investors understand the value of property management.
Property managers know the laws. We have maintenance vendors who are committed to our properties and offer their most competitive rates. We have processes for attracting and screening tenants and we know how to handle tenant communication.
We protect your property and more importantly; we protect your time. You don’t have to take those phone calls in the middle of the night about toilet problems.
Let’s talk further about how to be a successful real estate investor. Contact us at Hoffman Realty.