Investing in your own house is smart. But what if you want to invest in another property? There are plenty of people who have found advantages in owning multiple properties. Many will flip these properties within a period of a year or two, making the needed improvements and trying to get as quick a return as possible. However, there are others who look at these additional properties as a long-term investment. Their plan is to rent out the property and earn immediate income from them.
There are pros and cons to renting out properties. The first problem people will mention is having to deal with renters and yes, this can be a hassle. However, that does not mean that renting out properties is not a good strategy. If you were to buy a property, fix it up and rent it out for five to ten years, even if you do not make a profit, you’ve had someone else pay the mortgage on that property and now, you can sell it or do whatever you want because you are ahead of the loan vs value game.
Each Realtor Is Different
One of the first instincts people have when they want to invest in a rental property is to find a realtor who can help them manage it. It’s important to understand that some realtors will assist you with rental properties. However, a large majority of realtors prefer to work exclusively with the buying and selling side of things. This does not mean you should not take the time to look for someone to help you, especially when you consider how valuable their assistance will be.
What Realtors Can Do For Rentals
Once you have a property ready to go, it’s a good idea to work with an experienced realtor. Their input can help you avoid major issues and also ensure that you have realistic expectations for not only the property, but also what to expect from renters.
- Set pricing and standards: One of the biggest challenges property owners have is knowing what to charge for the property. Too little and you will not make a good return but too much and you will have the property sit for months. Knowing what to charge and demand of your renters is something you need professional assistance with, especially if you own in an area you are not familiar with.
- Advertise the property: Where are you going to list that you have a property available for rent? Are you going to try the most popular sites first? That’s no problem and you will probably get hit with 100 calls within the first week. Do you want to handle that many calls and prospects? Realtors know where and how to advertise listings, not only to get a response but to get the right response from a specific audience.
- Manage prospects: People are going to call with questions and they will want to know as much as they can before a visit and before talks begin. Their goal is to figure out if the place would be a good fit for them and this is where you need a lot of patience and the understanding that the customer is going to be hesitant and you need to give them the confidence they need to go forward with this commitment. This is what realtors do better than anyone and they know how to manage every type of prospect and minimize your wasted time.
- Handle background checks: Once you have a prospect or two that you like, how do you know to determine which option is the best? This is where realtors can make a major difference for you, especially with rental properties. The ability to do background checks and find out who the best prospect is can eliminate a lot of future stress for you.
The right renter can make a rental property a great investment and the wrong type of renter can make you want to throw a for sale sign up and call it a day. Having the right type of help can make a world of difference and improve the return you get on your investment, not only in the short-term but in the long-term as well.
Problems With DIY Renting
If you are considering managing your own rental property it’s important that you do your homework and know what type of advantages and disadvantages that decision can create. The advantage is that you save some money. That literally is the only advantage to DIY renting and that advantage can even be lost if you choose a poor renter.
DIY renting rarely works and especially struggles to work if you hope to have someone take care of the property for years. Good renters appreciate the property as much as you do. However, their commitment to the property will never be like yours is because they do not own it. That’s why you have to be appreciative of the advantages that come with hiring professional assistance, especially if you have multiple properties.
Realtors Are Not Property Managers
While there are some realtors who work in the rental game, none of them are going to stay on as a property manager unless they are paid to do so. Why is that? For a realtor, their job is done as soon as someone moves in. They are not worried about if the tenant is paying their rent on time, if the property remains in great condition, and so forth. If you want someone to do that and handle all those challenges and responsibilities, you will need to hire a property manager.
Benefits Of Using A Realtor
While realtors are not property managers there are still plenty of advantages you get from hiring them for your rental property. The key advantages are that they will help you understand how to setup the property as a rental, how to make it more appealing to people who are looking, but also how to limit your responses and filter it down to only the most qualified applicants. The lessons you will learn from a realtor in the first phases of this investment property will benefit you throughout your ownership.