Investing in rental real estate is one of the greatest and most trusted methods for creating long term wealth. Owning and operating rental properties brings with it the benefits of capital growth, cashflow and significant tax savings. A successful investment strategy for real estate involves many different things but I have compiled my list of the 5 most important things you need to know.
1. City demographics (www.city-data.com). Look for a city that has a low vacancy rate. Also make sure the region you are looking at has a stable and/or growing economy.
2. Screen prospective tenants. Make sure the monthly rent does not exceed 25 – 30% of their income
3. Cover your assets – Rental properties are often referred to as dirty asset. Make sure to have adequate homeowners insurance and an umbrella policy in place to protect yourself from lawsuits
4. Property Management – find a good property management company. They are worth their weight in gold.
5. Keep detailed records of all costs. Receipts, receipts, receipts; keep track of everything.
If you make sure that you follow these points you will make sure you are on the right track to creating wealth with real estate. Far too often people try to sell get rich quick schemes with real estate; don’t be seduced by all the hype. Building a significant real estate portfolio takes time, research, hard work and a methodical approach.
What other things are on your pre-investment checklist?