According to the experts there are 7 secrets that Real Estate Investors should know in regards to single family rentals . First and foremost you must remember that investing in real estate is very different from investing in stocks or other investments . Real Estate is an investment that has the ability to deliver excellent returns because the cash down payment is such a small fraction compared to the return on the retail value . However it is an investment that may require you to be more hands on to insure the decisions made affect your return in a positive way .
The approach to invest in a single-family propertyis critical in that you must evaluate your options and make a decision based on proen success in the past years . When considering your first or your next single family investment keep these 7 secrets in mind
1. Don't Let Emotion Dictate Your Decision
Remember you are purchasing for very different reason's than when you where buying your first home for your family . It is now just about the numbers .If the calculations make since and you will come out with a profit , then go for it .
2. Buy based on current returns , not future appreciation .
If the property will yield immediate positive cash flow the day the renter moves in should be your biggest concern . Don't concern yourself with the increase over time , you will only set your self up for dissapointment .
3. Have a realistic budget
Account for expenses you will incur over time . Plan ahead for the up keep of the property . This is an expense that is largely over looked and can be a huge contributing fact wanting to get out of the investment because it now becomes a burden that could have been avoided.
4. Knowing your sub-markets/neighborhoods
Always use the old rule of thumb - Location, Location, Location ! Be sure to do your research of the neighborhood where you intend to invest . Markets tend to swing and when they do you want to make sure you don't take a drastic hit . Don't buy based on a national article says it's a great area . Do your do diligence and research based on previous years .
5. Learn the local and federal regulations .
This is extremely important for landlords . It is your responsibility to know the laws . Knowing the requirements for federal fair housing ,annual registration and inspections falls on you so do your homework. Violations can prove to be very costly .
6. Build a relationship with your local handyman or contractor .
Repairs are inevitable over time. Having a relationship with a local plumber can come in handy when a pipe burst . Now you're not scrambling at the last minute to find someone . It is also good to know the cost of repairs in advance and again have these cost allocated in a reserve account .
7. Set aside funds for capital.
As a property owner you will have a few continuous expenses . Items such as roves, HVAC units, and driveways eventually wear out . Although these things typically have a longer life then your typical leaky faucets or garbage disposal etc. These larger ticket items are known as Capital Expenditures . These expenses can run into to the thousands or even tens of thousands of dollars so it is extremely important to set money aside on a regular basis to cover them .
The common denominator here is preparation . The major key to the success of investing in single family rental property is do your homework in advance and consider all the above and you'll do great .
