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One man lives the rental property ownership dream by owning over 60 rental properties that bring in $431,000 annually. He manages the properties from a van in which he and his wife live and travel. If this sounds like the dream life, you can have this life too by buying rental property.
After you become a real estate investor and buy your first rental property, you must protect it. These are the first steps you should take.
Establish a Tenant Screening Process
Establish your tenant screening process early on. You must have a thorough process to prepare for when you start receiving applications. This protects you because you will perform all necessary checks to uncover potential red flags.
It also ensures you adhere to the Virginia Fair Housing Law. This law states that you cannot discriminate against people who belong to a protected class. Without a set process, you could be accused of discrimination without intentionally doing so.
Your tenant screening process should include employment and income verification. You can also request to run a criminal background check. Don't forget to ask about the applicant's rental and eviction history.
Create a Maintenance Plan
Your rental property makes money in the short term by generating monthly rental income. It should also increase your wealth in the long term by appreciating it. Having a maintenance plan in place will help you protect the value of your property.
A maintenance plan should include weekly, monthly, quarterly, seasonal, and yearly tasks.
Purchase Insurance
Protect yourself and your investment by buying insurance coverage. As a rental property owner, you will want liability coverage. This protects you if someone gets injured or has personal property damage while on your property.
Consider buying other insurance that can protect you from natural disasters, evictions, loss of rent, or other events that cause property damage.
Have a Financial Plan
Treat the ownership of your rental property as an investment. Create a financial plan that tracks your revenue and expenses. This will include everything from property marketing and tenant screening to maintenance.
When investing in real estate, list your properties separately. That way, you can accurately track the financial performance of each property.
Hire a Property Manager
If you are new to owning rental property, consider hiring property management services. That way, you have an experienced team to handle the day-to-day management of your property. You can leverage the property manager's knowledge, experience, connections, and tools.
Become a Real Estate Investor
If you are ready to become a real estate investor, your first step is to buy a property. Once you invest in your first rental, you must take these steps to set yourself up for success. Buy insurance, establish processes, set your maintenance plan, and have a financial strategy.
The property managers at PMI Commonwealth work with property owners to establish an effective management plan. We customize our strategy for each property to ensure the unique needs of each rental property are addressed.
Feel confident when buying your first rental property by requesting a free rental analysis from our property manager.
