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Expert tips on managing your rental property

Many people consider that buying rental property is an appealing income investment, especially now when rates are low and the market is so volatile.

Expert tips on managing your rental propertyThose with money to spare should look out for these low rates, in order to know exactly where their investment stands. I started investing in the boom years just before 2007, and as mortgage rates increased, a considerable number dropped at an incredible pace. I strongly advise all investors looking to enter the real estate market to keep in mind that like any investment, there’s no guarantee you’ll make a fortune in the rental property marketplace.

Here, some tips I recommend to get you on the right path.

Perform market research

I don’t like to buy property without knowing more information about that property’s location. It’s really important to know the market as well. When you have money, the need to spend can be unstoppable. In spite of lower rates, investing and managing rentals just means binding capital to a property that has high chances of losing value.

I’m extremely cautious when it comes to giving away tens of thousands of dollars, especially because that usually means taking out a mortgage. When the price for a house increases, it usually means I could make significant leveraged gains above the mortgage debts, however, if the price falls, then my deposit gets a hit and my mortgage doesn’t change.

Investing in property pays off incredibly for many, both in terms of capital gains and income. Yet, it’s important to keep your eyes wide open and understand the potential benefits and drawbacks.

Select a promising location

A promising property doesn’t have to be located in the cheapest or in the most expensive neighborhood, and investors should know that. Promising usually means investing in a place where tenants would want to live. I like to invest in areas that have something to offer. Houses that are located close to supermarkets, parks, schools and playgrounds are excellent for families. Another tip would be to invest in areas close your own home. I for one know my neighborhood extremely well. I know what I love about it and what I don’t, so it’s easy for me to guess which properties have potential and which don’t.

Have a target tenant in mind

As an avid investor and connoisseur of the buy-to-let market, I prefer families with kids as tenants. These are my ‘targets’. That being said, I constantly want to buy homes in quiet neighborhoods with schools and stores located nearby. Families are not in a hurry to move out; they’re excellent payers and they want to feel that they belong somewhere. Hence, they will certainly take good care of my home. I can’t really say the same thing about students, who typically want small flats, make a mess and don’t pay their rent on time.

Know the risks

I always advise future investors in the buy-to-let market to be careful. Prior to investing, it is important to check both the positive and negative aspects of the sector. Currently, prices are dropping, so ask yourself this question: Can I hold onto my investment no matter what happens? I don’t like to invest and leave my properties empty, even if the market is not solid enough. If I have a home ready to be rent, but I don’t have a tenant because I’m asking for too much, what do I do? Let it rot for months and then invest in remodeling? Of course not. I drop my price.

Unfortunately, not many investors think like me. Many would wait for the market to recover. But what if it doesn’t? What will you do then? To some extent, investing in the buy-to-let market is like gambling. Apart from a small degree of luck, you have to make smart decisions.

Purchasing properties in safe areas, keeping an eye on the market, and constantly trying to look for dependable tenants are just some ideas I would recommend to future investors in the buy-to-let market. Spending money and buying is easy; what comes after this process is what matters the most. Be ready to commit and spend even more money on repairs and advertising. If you’re smart, making a profit will eventually happen. It’s about being an excellent negotiator and skilled business person in the real estate business.

Source: http://www.bizcommunity.com/Article/196/570/118126.html

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