Investing in rental property can make you rich.
Don’t let anyone fool you, it’s not easy.
But it’s worth it.
If you invest wisely, you’ll become richer than you ever imagined.
I made this list of fundamentals to help you invest in rental property.
Cash Flow is King
This is the most important lesson. Never forget this lesson.
What does it mean?
It means to only invest in property that puts money in your pocket every month.
If your expenses exceed your income every month, pass on the rental property.
Betting on the price of the house to make up for your monthly loses is a bet.
Location, Location, Location
This one annoys me. Everyone says it.
But what does that mean?
It means you should think of your customer.
Your customer with rental property is a renter.
So would you prefer to rent to someone who has to rent because of bad credit or rent to someone who chooses to rent?
That’s easy. Of course you prefer to rent to someone who chooses to rent.
How do you do that?
You have to own rental property in areas where demand exceeds supply of housing.
For example, buy property in urban areas that have amenities nearby.
Buy a house near Piedmont Park in Atlanta, Georgia.
Have you ever seen those house flipping shows?
You know the ones that investors buy a house, renovate it and then sell it for a profit.
They’re fun to watch, they’re sexy and they’re not realistic for most of us.
It’s very difficult to make a profit that way.
It’s easier to subdivide your rental property and turn it into multiple rental streams.
You can take a 4 bedroom house and turn it into a duplex with 2 bedrooms each.
Forecast Major Expenses
You can figure out the life of a water heater is 10 years.
And the life of an HVAC system is 15 year.
So make life easier and put money aside each month in an interest bearing account to help pay for those expenses.
You’ll be glad you did.
So you might have to make some repairs yourself early in your rental property career.
But it’s not feasible with more properties.
Find good contractors to make life easier.
Hire a Real Estate Agent
I know you are dreading this expense.
No body likes paying commissions.
But you’re looking at this the wrong way.
Sure you can use Craigslist to find a renter and save money initially but it may cost you more in the long run.
People who hire real estate agents to help them find a house to rent tend to be better renters.
I know this one from experience.
Get a P.O. Box
You don’t want renters to know where you live.
Sometimes you will have disagreements with your renter.
It comes with the territory.
So get a P.O. Box and have your renter sent her rent there.
Investing in rental property is a great way to get rich.
But it’s not easy and it’s not a get rich quick scheme.
Understanding this will make your experience much better.
Using these fundamental lessons will help you achieve your real estate investing goals.
Good luck on your journey.
Can you think of any other rental property investment lessons you should know?
Click the link to return to Finance Footing home.