Thinking about becoming a real estate property investor? While there’s a lot of potential for financial gain, there are a number of important considerations to keep in mind before you move forward.
Residential vs. Vacation Rental
You’re likely to get longer-term tenets with a residential rental, but vacation properties may earn you more money.
- If you buy a single-family home, a townhouse, or a condo, you can probably attract renters who are looking for a year or more contract. This means you’re only drawing up paperwork annually, and you can likely rent it unfurnished.
- When you buy a vacation property, you’re probably going to have more short-stay renters, and you’ll need to fully furnish the home and deep clean it between guests.
- An in-between option is to purchase a property in an urban area or convention corridor and market it as a corporate rental. Companies can block it out for guests and traveling execs and you’ll get mid-range rates with less upkeep.
Self-Management vs. Property Management
When it comes to the best approach to managing a rental property, much depends on your skills and your time availability.
- When you manage a property, you need to be on-call 24/7. You’ll need to advertise for tenants, vet them, create contracts, take deposits, collect rent, and manage upkeep.
- If you plan to manage your rental yourself, D2R-Collect is an easy to navigate solution for collecting rent from your tenants.
- It’s a good idea to familiarize yourself with various companies and contractors in the area for repairs. This may help when hiring a HVAC repair company on short notice.
- When you use a property management company, the company handles all of these details on your behalf, but they charge fees that could eat into your profits.
- It’s typically easier to manage a residential rental than a vacation property, so give careful consideration as to what works best for you.
Marketing Your Rental
Even if you go with a property management company, you’ll likely want to be actively involved in marketing your rental.
- Establish yourself as a business—your rental profit counts as income, and establishing a business helps with taxes.
- Design a great logo for your property rental company—a free online logo creator is easy to use.
- Consider establishing a website and a social media presence; this will expand your marketing reach.
When it comes to being an investment property owner, there are a number of moving parts. While you can generate a good income on an appreciating property, management issues have to be kept top of mind.