Real Estate Investment
Real estate investment has proven to be a lucrative option for savvy investors for decades. In today’s world, the rental market provides the opportunity for massive profits, with many Americans choosing to rent over purchase a home. Deciding to rent out a property investment can result in a steady supplemental income, but there are many facets to consider in order to protect said investment.
Perform Proper Maintenance
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Keeping your property profitable means following regular maintenance and repair schedules. Not only will this keep your property looking pristine (and help you avoid costly repairs that have been let go too long), but it’s also essential to keep the building and surrounding areas in great condition for your tenants. This is for two reasons: one, you want your tenants to stick around and avoid turnover, and two, it’s your legal duty to provide a habitable space for your tenants. Regular upkeep will keep your tenants, dissuade them from breaking a lease early, and encourage them to renew when the time comes, which is generally the best case scenario. If you’re not a handyman by nature, it’s important to consider hiring a professional to take care of the space. When budgeting for home repair costs, keep this general rule in mind: each year, you should expect to spend 1.5 times whatever monthly rental costs come out to.
Consider Using a Property Manager
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Entrepreneurs from a variety of backgrounds have found that real estate investments can be a lucrative supplementary income. However, this influx of investors is populated with individuals that are inexperienced when it comes to real estate management. If this rings true for your situation, it’s worth it to consider hiring a property manager. An experienced property management company already understands the local, state, and federal regulations concerning rental properties in your area. Using a property manager reduces your responsibility, and can decrease the chance of unlawful landlord practices. Property managers can handle the daily ins and outs of a property rental. They’ll deal with any eviction issues, make repairs when tenants call, and help place tenants in the space. You’ll generally pay a hefty sum for these services, but it’s often a worthy investment, especially if your real estate property is just a side role you’ve acquired.
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If you own property that you’re renting out, it’s in your best interest to file a legal entity. This will provide a measure of protection for your personal assets. When you rent out a space, you open yourself up to the possibility of lawsuits. When it comes to legal issues, the court almost always rules on the side of the tenant. Even if you successfully combat a lawsuit, you’ll still be responsible for legal costs and attorney fees. By creating an LLC, your home, personal savings accounts, and family assets are protected from legal action.
Make Sure You’re Covered
One of the most important facets of protecting your real estate investment is purchasing the right insurance policy. A Liberty Mutual landlord insurance agent can help you determine which plan is best for your property and geographical area. It’s important to do your research, as many policies won’t cover damages you might assume are included, from sewage problems to flooding, freak accidents and even terrorist attacks.
Always Screen Your Tenants
Ask any landlord about the cardinal rule when it comes to renting out property and you’ll get the same response: Screen your tenants extensively. As every landlord knows, tenant eviction isn’t a cheap option. You’ll be charged with cleaning up the space in preparation for a new tenant, take care of any costly damages that bad tenants may have left behind, and may deal with a loss of income due to vacancy while finding new tenants. It’s in your best interest to search for high-quality tenants who are looking for a long-term home.
There’s a lot to consider when it comes to protecting your real estate investment. Keep these strategies in mind to maintain profitability while securing your real estate investments.