When you purchase your first rental property, there are some critical factors that you need to be assessed. As Redfin explains, you need to determine how much you can charge for rent by taking features such as location, home size, and recent updates into consideration. You also need to determine how much investment you’re willing to put toward the property and whether it’s sufficient enough to receive a return. Also, don’t forget to consider what tenants may be looking for and who will be managing the property before making any final purchases.
Get the Proper Insurance Coverage
Every form of business opens you up to potential lawsuits and other legal actions; property management is no exception to this rule. Before rent out your first property, invest in the proper insurance policies. Professional liability insurance, also known as errors and omissions, is a great starting point. This coverage will help to protect your business, properties, and subcontractors from specific claims involving negligence other related incidences. Talk with an insurance agent to see which policy is best for you.
Choose Your Tenants Wisely
Finding tenants for a property is much more complicated than selling a product or service. As the owner and manager of the property, you’ll be entrusting renters with your investment and assets. You’ll have some insurance coverage and legal protection, but you don’t want to solely rely on them. Instead, take some time to carefully find tenants who are trustworthy, financially stable, and clear of any criminal history. It’s common for property managers to have a screening process for weeding out unreliable tenants. You should always look for ways to protect your property and your investment.
Find a Property That Is Easy to Manage
Not every rental property will pose the same challenge for you as a property manager. There are some that will be much more difficult to manage due to their age, size, and location. When choosing your first rental property, you’ll want to find something that is fairly easy to manage. This way, you’ll have enough time to focus on the business side of your role as the property manager. Finding something that is small, relatively new, and located near your own home is a great place to start.
Keep Accurate Records
Even though you’re not selling a service or good, you’ll still end up doing a lot of paperwork as a property manager. In order to keep everything organized, you need to maintain accurate records. This includes your legal paperwork, transaction history, permits, licenses, and other important information. Whether you need to update a legal document or confirm last month’s payment for a tenant, having detailed records will make it easy to run your company successfully.
Investing in your first rental property is an equally exciting and stressful endeavor. As a beginner, don’t let the size and complexity of the real estate market shatter your goals. With the right strategies and some hard work, you’ll be on your way to creating a financially stable future through real estate.