Real estate has long been a favorite option for investors. And that shows no signs of waning.
As housing supply dips and rental demand remains stable in Memphis, it’s an excellent time for new investors to make their mark and try their hand at a real estate venture.
If you are renting out a house for the first time in the coming year, here’s what you must do to maximize your chances of a successful rental investment.
Familiarize Yourself With the Real Estate Market
Before listing your property for rental, you’ll need to know a bit about the local real estate market and broader economic trends. That will help you determine current demand and set your rental price.
Knowing the neighborhoods is also essential if you have yet to buy a property. Different types of people favor other neighborhoods.
You may want to focus on properties aimed at young, single professionals who prefer bustling areas close to offices and nightlife. Or you might aim for a more suburban area and a family or retirement property.
When you examine prices, you’ll need to look at historical data to help you predict current and future trends. If there is a surplus of rental properties on the market, it might be a sign of a downturn.
Prepare Your Rental Property
You’ll need to prepare the inside of your rental property before it’s ready for a tenant. Your most important task is to check the systems in the property to ensure they are in excellent working order.
That includes plumbing, electrics, and the HVAC system. It’s best to use a professional to inspect these. You may also want to do an overall safety inspection on the property.
Sometimes, it’s worth doing a few upgrades to improve your property’s presentation for the rental market. That could boost your real estate income.
These could help increase your rental price and make it easier for you to secure a tenant. Focus on areas that look tired or suffer wear and tear, like peeling paint, old carpets, or broken tiles.
Replacing old cookers and fridges with modern ones is also a good idea. If the kitchen and bathroom look dated and old, you shouldn’t rule out a more dramatic overhaul to these areas.
These could make them a selling point as tenants favor homes in excellent condition.
Get to Know the Legalities
You must know about state law on rental properties and tenant rights. Familiarising yourself with these will help protect you from litigation.
Many issues, like security deposits and evictions, may fall under legal or regulatory restrictions. These change sometimes, too, so you must stay updated with new laws.
That includes permits you might need and obligations as a landlord – like avoiding discriminating against tenant applications.
In addition, you’ll need to understand how to create a lease agreement that protects you and your property while staying within the law. You’ll need to be thorough with this.
For example, if you don’t want pets on your property, you should ensure you cover this in the lease. That way, the tenant will have to read it before signing, and there will be no misunderstanding.
Find and Secure Tenants
Your next step is to find tenants for your property. Don’t leave this to chance; you must actively market your property. That means getting your property in front of as many people as possible.
Try classified ads, social media, and paid online advertising. You should also take professional photos of your property and consider producing a video for a virtual tour.
When you have a tenant application, it’s time to do some background checks – commonly known as tenant screening.
That includes credit checks, employment records, and past landlord references. You may prefer a property management agency to do this for you.
To reassure you that your tenant choice is correct, arrange an interview before you sign the lease. It’s a good chance for the tenant to ask questions, too.
Ongoing Tenant Management
When you have secured a tenant for your property, the work doesn’t end there. You’ll need to manage the ongoing relationship, including supporting the tenant with any issues they have with the property.
That might be a minor issue, like a query about utility bills. Or you may have to handle maintenance requests, such as an emergency plumbing issue.
Establishing a relationship with trusted contractors is essential so that if something goes wrong with the property, you have experts on hand to fix it.
As a landlord, you’ll also be responsible for taking rent payments from your tenants, including chasing them for late payments. Many landlords prefer a professional management company to do this for them.
Aim to take a proactive approach with your tenant and property management. Keeping tabs on the property and resolving issues before they escalate is the secret to a strong, long-term relationship with a reliable tenant.
Financial Record Keeping
Your property is like any other investment. You need to keep track of the financial side of things. This task is about more than property value and your rental income.
You’ll also need to maintain a budget and track all expenses, like maintenance work.
Use software to keep this organized and easy to handle. Check that you are operating profitably, and if not, look at ways you can manage your costs.
Consider hiring property managers if you want someone who can dedicate their time to overseeing the financial aspect of your investment.
Your current tenant won’t be with you forever. When their lease expires, you’ll need to go through the steps of advertising your property again.
You should anticipate this and start the process early because it will help you minimize the gaps in rental income. When you readvertise, plan any property maintenance or upgrade work to coincide with when your rental is empty.
Renting Out a House for the First Time: Improving Your Chances of Success
Renting out a house for the first time can be a nerve-wracking experience. But with a bit of organization and planning, you can make this process smooth sailing.
You can also boost your chances of success with the help of a professional Memphis property management company. Reedy and Company specializes in supporting landlords with rental property management. To find out more, head here.