Navigating the real estate investment industry can be confusing as a first time investor. In addition to focusing on your personal rental management, you also have to explore the organizational side of things. With the real estate market rapidly growing, there are a lot of money making opportunities. However, you have to be prepared to finish a project and then be ready to move onto another one. Choosing the right property management company will be a crucial part of generating income from your investment.
Explore your property management options
Before you choose a property management company, you want to explore your options. Many real estate investors purchase properties that are not in their current hometown. This means that the property management company that you choose will be responsible for completely managing your property investment. Make a list of potential residential property management companies in the area.
Ask a lot of questions
As you begin to narrow down your property manager options, it is important to ask a lot of questions. How many properties do they currently manage? How much do they charge? What kind of property management services do they handle? What do they do in the event of an emergency? Are they on call for all of your renters or are you expected to be available too? How long do they sign contracts for?
These are all important questions that will help you make your decision. It can also be helpful to go over these questions with another real estate investor. Get an idea of what is normal in the property management industry. Approximately 30% of Better Homes and Gardens Real Estate survey respondents reported that they would be more likely to invest if they had guidance from a real estate investment professional. Finding a property management company is a great point of mentorship.
Complete your own competitive market analysis
Competitive market analysis is often done when buying or selling residential property. However, they are also useful when evaluating rental income potential. You should have already completed this analysis when deciding if the property was a good investment or not. But, you will need to run an updated CMA when it comes time to rent the property. Look at nearby houses for rent. Compare these houses for rent to your investment property, including the location, square footage, number of bedrooms and bathrooms, and whether or not the property has been recently updated. These housing characteristics will help you come to a market rental price.
When you are consulting with possible property management companies, you will want to discuss price. Make sure they are aware of the market and the current houses for rent costs. Depending on how much they charge for their property management services, you might have to increase the rental price a little to profit. However, many rental properties do not bring in a profit in the first couple of years. Instead, property owners are focused on building equity, which can eventually turn into a profit.
Evaluate the market for your next real estate investment
If you found it simple to renovate and then find a renter for your property, you might find that this is a good market for another investment property. Approximately 3% of Americans consider themselves to be real estate investors and plan on purchasing property within the next year. Because many residential houses for rent do not initially bring in a profit, it is important to quickly move onto the next project. The more successful projects that you can get going, the quicker that you will turn a profit.
Despite a mostly recovered real estate market, there is still money to be made as an investor. According to a recent survey by Better Homes and Gardens Real Estate, 94% of current real estate investors are interested in further investment opportunities of this nature. If generating rental income is in your business plan, you will need to find a reputable and reliable property management company. They will play an important role in your investment success.