Investing in rental properties can be a great way to make money, but it’s not without its challenges. From finding the right property to dealing with repairs and maintenance, there are a lot of potential problems that new landlords need to be aware of.
Here are the four most common challenges you may face when starting in rental properties.
1. Finding a Profitable Property
The importance of finding a suitable rental property can not be overstated—entire books have been written on the subject. If you buy a too expensive property, you will never make any money. However, trying to get a bargain can also be difficult. If you buy a fixer-upper, you need the skills, time, and money to make the necessary repairs and renovations.
If you’re patient, you may be able to get a good deal on an investment property. However, if you have a full-time job and a family, every minute you spend repairing the rental is a minute you’re not spending on something more fun or profitable. Fortunately, some management companies can handle all the legwork for you, though they will charge a fee.
2. Renovate or Redecorate the Property
Many landlords start with the intention of improving the house’s appearance to make it more attractive to renters. This can be a good idea in some cases, but it does involve spending a lot of money. Renovating a property can be expensive, and you might only be able to charge lower rent for the first few months. For this reason, you might want to reconsider renovations if you’re strapped for cash.
Suppose you are going to invest money into a renovation project. In that case, we recommend hiring an interior decorator to help you choose the right paint colors, furniture pieces, and accessories to create a great-looking rental without spending too much money.
3. Finding Tenants
Finding good tenants can be a challenge, but it’s not impossible. You must do your homework before you start looking for tenants. Start by talking to other landlords in your area, as this can be a great way to get a sense of the local competition. You should also check with your local Better Business Bureau to ensure you’re dealing with a reputable company.
You should also make sure that your rental is presentable and up-to-date. If a prospective tenant feels it’s time for an upgrade, you’re probably not going to get their business. Once you have a few prospects, running a credit check is a good idea. It’s a small cost to avoid a potential headache.
4. Dealing With Maintenance Issues
Once you buy a rental property, you will likely spend most of your time dealing with maintenance issues. These aren’t just things like fixing broken light bulbs, but also include things like:
- Cleaning up after the tenants
- Cleaning the carpets regularly
- Trash collection
If you manage the repairs well, you can have the maintenance costs be less than one percent of the rent—which is a pretty good deal. Typically, you will want to replace the property manager every few years after they’ve gotten too burned out to be effective.
Like any other type of investment, there are challenges and risks involved with investing in rental properties. While it may take more time and effort than you might be accustomed to, the rewards can be great. With a good strategy and patience, you should be able to make a decent return on your investment.
NYC Apartment Management manages brownstones, co-ops, condos, and rentals in New York City, Queens, and Brooklyn. Every landlord, property owner, and investor is different, so we strive to bring excellent results to each client. This is precisely why we offer you a comprehensive service package customized specifically for you. You and your property are unique, and you and your property deserve a management company that takes pride in designing your unique service package. Get in touch with us, and let’s talk!