Real Estate Investing – Your first Rental Property

Property values have taken a nose dive and families are walking away from homes they can’t afford. So where do all these families move to when they leave their properties due to foreclosure? They have to rent from someone. Why not you? The current market screams rental properties as the best bet for real estate investing.

There are many strategies for finding good rental properties. The easiest way is to keep track of homes for sale in your neighborhood and surrounding areas. Real estate investing in your own area can be a good strategy because you’re already familiar with the locale and managing your properties will be much easier because you’re nearby. Tenants usually are more mindful when the owner is close by.

The biggest caveat to real estate investing in your own neighborhood is to be careful if you know the sellers personally. The neighbor who has heard talk of your real estate investing prowess may think you are more willing to pay list price or worse, might think you’re trying to take advantage of them if you try to negotiate. Business and neighborly relations don’t mix well, so you may want to consider working through an agent as an anonymous buyer if you’re not sure.

What kind of property should you consider?

If you are not a handy person or don’t have a regular custodian in mind, the best kind of rental property is one that is currently occupied by the owner. This is because owner occupants generally take better care of properties than tenants or landlords. Of course you will still need an inspection but chances are the home will be in much better shape.

Apart from the initial condition, you want to find a property that is as maintenance-free as possible. Remember you are not looking for your dream home you are looking for a property for real estate investing that is well kept and easy to maintain to protect this investment.

For example, hardwood floors are a great selling point but depending upon the size of the house, carpet may be easier to clean and replace. The easiest option is a mixture of the two, in this case it’s highly unlikely that you’ll have to replace the entire house at once and you can change it as your needs change.

For the kitchen and bathrooms, while tile and grout denote class and quality, unless you’re assured of renting to a fastidious grout cleaner it will be difficult to restore the grout to showroom clean between tenants. Laminate and vinyl are better choice for rental units because they can be replaced cheaply, quickly and still carry the appearance of class.

These are considerations that many new real estate investors don’t consider. They’re under the impression that in order to rent a home everything must be top of the line, while of course you want to provide an attractive and marketable rental unit, you must factor the transient nature of tenants into your costs. Nonetheless, despite the myriad of details you must consider in today’s market, rental units can be the best real estate investing strategy.

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