The first rule of real estate is location, location, location. A successful rental property is in a desirable location, whether it’s for long-term or vacation rentals. Here’s what else you should know if you’re considering buying a rental.
Invest in Property Management
Sometimes you have to spend money to make money, and that definitely applies to real estate. Besides the initial investment of purchasing your home, you may also want to consider investing in a property management company.
What a Property Manager Does
In general, a property manager can handle the everyday business of operating your rental. For a flat fee and/or a percentage of the rental income, they can be the middleman between you and your tenants.
Rhino Property Management Utah
With Rhino, you won’t make any payments until your property is rented. We offer no-cost consultations to see if we’re the right fit for you. Our rental property management services include the following:
- Cleaning and Advertising Vacant Properties
- Tenant Screening and Background Checks
- Property Inspections
- Handling Tenant Complaints
- Repairs and Maintenance
- Rent Collection and Payment Processing
We offer all of this at the best price around. Our rental property management Utah team is available to you around the clock for any questions or concerns you have as a homeowner.
Expect the Unexpected
As a landlord, you always want to be prepared for the unexpected. Can you cover your mortgage in the event your rental property is vacant? What about the cost of emergency repairs such as burst pipes or broken furnaces? When you invest in a rental property, you need to ensure you have a fund for unexpected expenses; you can’t always rely on rental income to be enough.
You can prepare for periodic expenses by purchasing a modest rental home and pricing it appropriately. Our property management team can consult with you to determine the most competitive and realistic rental amount you should ask for your property. More on that below.
Avoid a Fixer-Upper
The lure of a fixer-upper is usually its low purchase price. But, when you peel back the wallpaper, rip up the carpet, and dive deeper into the home, what hidden costs will you uncover? It’s usually not financially beneficial to invest in a fixer-upper if it’s going to become a rental home. You run the risk of not earning a decent return on your investment, and you may not be able to rent it for as much as you need in order to recoup your losses.
Determine Your Margins
Now that you’ve walked away from that tempting, low-priced fixer-upper, it’s time to calculate your margins if you invest in a rent-ready property. Ideally, you want to aim for a 10% return on your rental property investment. Annual property maintenance should, ideally, cost no more than 1% of the home’s value, while other costs to account for include HOA fees, taxes, lawn care, and snow removal.
When it comes to determining your rental property’s income potential, there’s a simple calculator. Your monthly rent should be at least 1% of the home’s value. So, if you purchase a home valued at $150,000, you could conceivably charge $1,500 per month in rent. If you’ve invested wisely, that 1% will cover not just the mortgage, but your homeowner’s insurance, HOA fees, and potentially utilities. With your Utah property management company, you can determine what, if any, services will be included in your monthly rent.
Your rental agreement should protect you as a homeowner, spelling out the specifics of what’s expected from your tenants. A good property management company can help enforce those expectations and carry out the consequences in the event of default.
In addition to purchasing homeowner’s insurance, you can also invest in landlord insurance. It can offer financial support in the event you lose rental income or incur expenses due to damage caused by your tenants. Landlord insurance can also offer liability protection if a tenant, or visitor to your rental, is injured on-site at no fault of their own.
When you sign on with Rhino rental property management Utah, we can familiarize you with your legal obligations as a landlord. With us on your side, you’ll never be surprised regarding your responsibilities when it comes to the habitability of your property, the process of collecting or returning security deposits, or tenant screening procedures.
If it sounds like owning a rental property is more work than you anticipated, rest assured that you don’t have to do it alone. As long as you provide the rental property, we can take care of the administrative work of turning it into a profitable investment. Contact us today for a consultation.