If you were advising a new buy and hold rental property investor what are the most important things you would tell them to consider before buying their first rental?
I am putting together some literature for a new investor and have some things in mind to pass along to him, but wanted to see what the BP community thought.
Thanks in advance!
Hi Michael...great question. I would advise ensuring that he/she has adequate cash reserves going into the investment in preparation for any rehab or unexpected expenses. Additionally, she/he should do her or his analysis thoroughly and set parameters around what type of properties/deals are in and out of scope. It's very easy to get distracted by new deals popping up so maintaining focus on the goal(s) is key!
Hope this helps.
Great topic.. I would begin by saying enjoy the process and journey . Get a great attorney and research and look up everything. View it as aneeded amazing chance to learn some life changing things!
I would advice them about hidden fee, such as insurance, cap ex, vacaney etc... a lot of people just see rent-mortgage=cash flow newbie don't understand its a lot more to it...
I fully agree with @Deshawn Lewis ! All people want is to see that rent > Principal/Interest. They don't factor taxes, understand that they have to have rental property insurance, how high the repair costs are, etc. HUGE problems with every new investor I've met.
One of my favorite questions is: how much time do you have? Many newbies plan for doing stuff on their own, but don't factor in that they already have a full time job, or the property is 30 minutes away, or that coordinating access with tenants is not fun, etc. Based on the amount of time they have is what level of management I recommend they look into, from fully self-managed to turnkey style.
That's good info @Bryan O.
Thanks for the insight.
How to select the right property/location.
How to 'harden' your rental (great thread here on BP).
How to select/screen for tenants.
How to manage tenants.
Find great contractors.
How to keep tenants.
How to minimize vacancy during turnover.
Know the landlord/tenant laws!
Find a good eviction lawyer if you're not doing your own.
What's your exit strategy when you no longer want to be a landlord.
Great list. Thanks @Kelly B.
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