Why Some Landlords Fail and Others Succeed

Are you thinking about investing in a rental property? Like any investment, there are risks involved. But of course, those risks can pay off, and you can become very successful as a real estate investor and a landlord. The tricky part is weighing the pros and cons and having a reasonable understanding of what's involved with real estate investing, particularly becoming a landlord. 

What You Gain

Evaluating a property for potential rental takes a bit of investigation and comparison shopping. Scates Real Estate can help you identify the best properties with the most ROI potential in the Plymouth area. The Balance also recommends two different formulas for calculating your profit possibilities:

1. The Cap Rate is the profit you can make from net income generated by the property, divided by the asset cost.

2. The 1% Rule: Gross monthly rent (before expenses) should equal at least 1% of the purchase price to be worthy of a second look; otherwise, skip it. 

Simpleshowing.com suggests the different ways you can benefit from rental property investments, such as increased cash flow, equity, and tax benefits. The property may even appreciate in value over time, especially if you do the right repairs and upgrades.

To Repair or Not to Repair

Buying a fixer-upper adds risk to the equation. The cost of repairs greatly varies, depending on whether you can DIY or need expert help. But there may be repairs within your budget that could justify a higher rent so you could get that money back in the end. Let's dive into possible "upgrades" even if the property is in decent shape:

●      Landscaping: The property should look neat and have attractive landscaping. Well-mown lawns and colorful flowers can make a difference in curb appeal.

●      Painting: Inside and out, a fresh paint job does wonders in making a property look and feel good to prospective renters. It doesn't have to be overly expensive either; shop around for quality but cost-effective painters in your area — or even do it yourself.

●      Outside Spaces: Curb appeal doesn't have to be complicated but it can reap excellent returns. This can be as simple as removing a dead tree or unsightly stump that may be encroaching on your home’s foundation without you knowing it. You can quickly find a local tree removal contractor online, but make sure to only consider the well-reviewed ones. Also, don’t choose the first provider you find — get estimates from several and find out what’s included in their services (i.e., stump disposal). Spending a little bit of time on simple measures like this that can spruce up curb appeal is worthwhile when you have filled apartments and satisfied tenants.

When you consider the effect of simple changes like a bit of paint, mowing the lawn, and adding some fresh, healthy plants to your property, it can boost your property value and increase the number of quality tenant applications.

Deciding to become a real estate investor, especially with rental property, is a big goal. However, with planning, research, a few well-executed changes, and the help of the Scates Real Estate team, you could rent your property out quite quickly after your initial purchase and start seeing the rewards. Reach out to start the hunt for your perfect rental property today! (612) 877-2100