Rental property ownership is a good way to build property equity and bring you cash flow while you save for retirement. The following are some tips to help you become a great property investor and rental property owner to invest in your future.
Look For Cash Flow
Before you can be an investment property owner, you need to find a property that is going to work well as a rental. A good rental is one that brings in more cash flow than its expenses. You don't want to have to lower your asking rent in order to fill the property, because this will reduce your positive cash flow. For this reason, it is a good idea to do the necessary cash flow analysis as you search for a property so you can find good cash flow before you make the decision to purchase a property.
You can use a basic rule of thumb as you search for a property, looking at the property's asking price in relation to the amount of rent you can charge for it. When you look at a property's purchase price, you should be able to get one percent of its purchase price in monthly rent to have a positive cash flow. For example, if you are considering purchasing a duplex that costs $250,000, one percent of the price is $2,500. What this equates to is you should be able to charge rent for both units of the duplex that equals $2,500 or more, such as $1,250 for rent on each side of the property.
Consider Hiring Professional Services
As you build on your investment portfolio and buy more properties, your time spent managing all your various rental properties will increase. This can ultimately reduce the amount of time you have available to look for more investment properties. But you can hire a professional property manager to handle all your properties and their management to keep them bringing in cash flow and give you the time to do what you do best.
Check into a local property management company to take on your day-to-day tasks, paperwork, and responsibilities with your rental properties. They will complete tasks, such as screening tenants, collecting rent, and handling evictions. They will also be able to advertise and market your property and show them to prospective tenants. You can hire a property management team for a certain percentage of your monthly rent collected.