A Step-by-Step Guide to Investing In and Managing Your First Rental Property

If you have a large sum of money saved for a down payment on an investment property and you’re comfortable fulfilling your many obligations as a landlord, you may be ready to begin the search for your first rental home, condo, or multi-unit property.

According to experts at BiggerPockets, investing in a condo, single-family home, or small multi-family property such as a quadplex or duplex is typically best for first-time real estate investors—as larger multifamily structures can be difficult to finance, manage, and sell later on. Multi-family properties have the potential to generate more cash each month, but the responsibilities of dealing with multiple tenants can be overwhelming for first-timers.

Before purchasing your first investment property, it’s important to explore all your different options—as this will help you select the right type of rental for you, and manage it in the best possible way. To explore the step-by-step process of buying, managing, and preparing your investment home for future tenants, read on!

To learn more about how Preferred Realty can aid the home-buying process, send a message online or call (770) 486-5242 today!

1. Making It Legal

Now that you’re ready to launch your new rental property business, it’s time to register it as a legal business entity with the state in which you’ll be operating. Business needs vary, but the top considerations for selecting the entity type typically are: (1) the protection it offers you as the business owner; (2) flexibility in how you run your business; and (3) ease of the registration process. An LLC often provides the best options for all three considerations, and it can be completed in about five steps, depending on your state.

2. Find the Right Investment Property

When looking for a rental home to invest in, it’s vital that you work with a talented and experienced real estate agent from Preferred Realty who can help you to find the right type of income property for you. You’ll also need to consider your budget and what you can afford. As you search for the right type of rental home to invest in, however, it’s also important to look for properties in profitable neighborhoods that are likely to attract prospective tenants. Typically, profitable neighborhoods feature:

  • Good schools and low rates of crime
  • Nearby amenities such as parks, restaurants, and movie theaters
  • Lower property taxes
  • Job growth

During this time, you’ll also need to secure financing for your big investment. Your mortgage lender will help you to explore your financing options, but several possibilities may include conventional mortgages, home equity loans, or private money loans.

3. Decide How You’re Going to Manage It

After you’ve purchased your first investment property, you’ll need to determine whether you’re going to pay for professional property management services—or manage the rental home on your own. As the owner and manager of a rental property, your responsibilities will range from tenant screening and rent collection to performing timely repairs and replacements when something breaks or stops working. However, a property management company can help to take some of the weight off your shoulders—especially if you don’t have a lot of spare time on your hands to maintain the home, screen tenants, collect rent, and check in with your renters.

4. Attract Prospective Tenants

Once you’ve decided how you’re going to manage your investment property, it’s time to make a few home upgrades that will help to attract potential tenants and increase the value of your property. To enhance the curb appeal of your rental property, for instance, you might choose to give its exterior a fresh coat of paint or change the color of the home altogether. Typical project costs average $2,500, but the cost of painting a home’s exterior will depend on the below factors:

  • How easily the paintable area can be accessed
  • The size of the home
  • The type of material that needs to be painted, as brick or stucco materials typically cost more than wood or vinyl

Moreover, several other great upgrades and improvements include painting the walls in the kitchen or bathroom, purchasing new window coverings, and replacing or painting the front door to the home. If necessary, you may choose to replace one or more of the appliances as well.

A Final Word

Purchasing and managing your first income property can be risky, challenging, time-consuming, and downright overwhelming at times, but it can also be financially rewarding—especially if you keep these tips in mind as you search for a home to invest in. From the tax benefits you could qualify for to the equity you’ll build over time, investing in a rental property could be a risk that’s well worth taking.

Creating a Smart Home: Your Introductory Guide

Smart home technology represents a sci-fi vision come to life. We’ve all spent decades imagining a world where we can ask our robot butler to turn out the lights or turn up the heat, and now that reality is here. Unfortunately, it’s also super intimidating. There’s a lot to learn about setting up a smart home, and somehow none of the old TV shows covered the nitty-gritty details like syncing your devices or setting up a secure network.

Never fear: Your smart home dreams are within reach. Once you’ve found the perfect home with Preferred Realty, you can use this guide to turn it into your perfect smart home. Here’s how to get started:

Make Safety a Foundation

If those sci-fi shows wanted to paint a narrative of “smart home gone wrong,” it usually boiled down to your devices growing sentient and, of course, evil along the way. The real dangers of smart home tech are far less exciting but honestly more disturbing.

The more devices in your home you have connected to the internet, the more points of vulnerability you introduce into your life. This means every app-connected washing machine or smart TV makes it that much easier for a bad actor to control your devices and get onto your network. The results of this can manifest as anything from prankster-like behavior (such as turning your TV on and off) to far more dangerous acts (such as hacking into your home surveillance to monitor the best time for a break-in).

We don’t say this to scare you — only to emphasize the importance of digital security. Simple security measures go a long way toward preventing these things. For starters, always secure your WiFi network with a truly random password. Use a password generator rather than coming up with something yourself — humans are very good at creating patterns and, therefore, shockingly bad at random password generation. You should also set up a hidden network for your smart devices. These aren’t completely inaccessible, but they’re much less vulnerable since they won’t show up in “available network” searches.

Start Simple

Many people’s first big mistake with smart home technology is doing too much, too fast. Not only will this put a massive project on your shoulders, but your initial ideas about what you want out of a smart home might be wrong. Starting small — for example, with a smart hub and one or two connected devices — is a better bet.

Pay attention to how you use your devices, and think critically before bringing new tech into your home. Smart home tech is expensive, after all, and you really want to be sure you’ll actually use a device before you bring it in. For example, a smart coffee maker might be a great fit for someone who wants to schedule coffee so it’s ready first thing in the morning, but a bad fit for the manual coffee enthusiast. Building up your smart home network gradually gives you the opportunity to think about these kinds of things.

Focus on Tech That Works For You

It’s easy to picture the fun stuff — blasting your favorite song via voice command, for example — when you imagine your smart home, but there are some extremely practical benefits to smart home tech. For example, you can use a smart thermostat to lower your heating and cooling costs. Smart laundry machines, which send you notifications when they’re done, are perfect for people who habitually forget to move the wash into the dryer.

While you’re outfitting your smart home, you’ll find that these practical features quickly become more valuable than the super exciting stuff that got you into smart home tech in the first place. Make no mistake — a finished to-do list and a manageable utility bill are thrilling in their own way. Good luck building up your smart network. That bright, shiny future is right in front of you.

Need to find the perfect home to smarten up? Get in touch with Preferred Realty to find an agent you can trust.

By Alex Robbins

Photo Credit: Pexels