|
With the overwhelming popularity of shows like "Flip This House," investment in a second home is becoming commonplace. Sarasota real estate investing is even threatening to pass up some types of stock and bond investment as the most popular type of investing for those looking to put some money towards retirement.
But what are the best strategies for those that are new to the investment game? Even though real estate investing is one of the "safest" ways to invest, you can still lose your shirt if you´re not careful. Here is a short list of useful tips for those looking to get into real estate investing.
- Don´t be afraid to raise the rent, within reason. If you´ve bought a second home, and instead of flipping it, you´ve decided to hang onto it for a while and rent it out, make sure you´re being competitive with your rent. A trap that many new landlord run into is the urge to be a "nice guy" and charge less then the market average in that area. Well, being a nice guy isn´t going to do too much for you when it comes time for retirement. Every tenant knows that costs rise every year and so does rent. Check around the area where your property is to make sure you aren´t giving your tenants a free ride.
- When you finally go to sell your property, try to show that it made you money over the time you owned it (assuming you rented it out.) You´ll boost your asking price significantly because you´re showing that not only are you selling a nice property, but also a property that makes money. It´s like buying real estate and a business in one transaction.
- Do everything you can to keep your renters. Now, this may sound like it´s knocking heads with the previous point about raising rent, but it isn´t. A great way to keep all of your units filled with rent-paying tenants is to appeal to markets that are otherwise neglected. In most major cities, it´s next to impossible to find a building that takes pets. If you advertise to this group, you can pretty much count on the fact that you won´t have any vacancies any time soon. You can even charge higher rent because of the "premium" of renting an apartment or home that takes pets.
- Write in a lease clause into any rental contract. People tend to feel connected to places they like, places they feel safe and places they feel comfortable. If you rent a nice, renovated Sarasota home to a couple and they settle in there, there is a chance they may want to buy the property outright from you. Make sure you give them the chance to. Putting in a lease clause in a rental agreement is very common, but it can take longer to draw up and cost a few extra dollars, but the potential gain is more than worth it. The whole point of investment property is to have someone fall in love with the place after you´ve fixed it up. Who better than the folks already living there.
- Don´t be afraid to go with the local need. This goes hand in hand with the pet point above. If you just bought a property in or around a major college or university, don´t be afraid to rent to students. If you live in a top vacation destination, maybe you can turn your new property into vacation condos or even time shares. Pretty much every spot in the country has some sort of magnetic appeal that you can be a part of. This way, the marketing of your property is half done and you haven´t even spent a dollar yet.
- Don´t neglect the outside. When you´re showing your property off to potential renters, remember, you never get a second chance to make that first impression. If your property is amazing on the inside but looks dumpy on the outside, you´ll have trouble attracting quality tenants. Pay just as much attention to the outside world as you do the inside.
Adding a rental property to your investment portfolio can be a great idea. You´ll have to invest time and hard work to make it a viable investment, but for some, working the day in a house in need of some TLC beats buying and selling stock any day.
GBrey |
