Ready to Be a Landlord? We Have Great Tips for You

The current housing market is primed for buying hold investing. Though home prices have slowed their rapid growth, they are still on the rise across the country. Prices are expected to go up 3% across the nation, and should increase by much more in hot markets like California and New York. Rent is also on the rise, expected to rise the most in areas where home affordability has reached critical levels.

With rental real estate investing, investors can benefit from both situations. In major metropolitan markets, many people with mid-level incomes are unwilling or unable to afford homes of their own. In these markets, home prices are expected to increase anywhere from 3 to 10% per year over the coming years, and rent will go up concurrently, creating a large pool of mid to high-end renters.

As a buy and hold real estate investor, you can expect to make monthly income from your tenants as well as the substantial ROI you should make on your investment when you resell your property in four to six years.

Clearly, now is the time for buy and hold real estate. So the only question that remains is, are you ready to be a landlord? If you are considering rental real estate investing for the first time, here are a few guidelines on how to make the most of your investment.

Finding the Balance Between Earnings and Effort

Many would-be rental real estate investors worry that their lives will be taken over by the demands of being a landlord. While you certainly can manage your own properties as a buy and hold investor, this isn't required. You'll make the largest profit on your investment if you handle the properties yourself, but the effort simply might not be worth the extra cash.

With a trusted property management firm, you can hire out practically all the responsibilities that go along with being a landlord and free up your time for other pursuits and investments. The question is simply one of how you weigh your time and energy versus the additional profit that could make if you choose to go it alone. The right answer for you won’t be the right answer for someone else. Figure out what will make you the happiest with your investment.

Having the Right Team Behind You Makes All the Difference

You may want to be your own property manager, but you will almost definitely want to hire a CPA and a lawyer to help keep your investment both profitable and legal. There are a great deal of tax laws and real estate laws that can either work to your benefit or get you in a lot of trouble. A variety of tax benefits can significantly reduce your tax burden each year, and a trusted CPA can help you take advantage of all of these. Likewise, a good real estate attorney can ensure that you stay in accordance with local, state, and federal codes, keeping you out of trouble and helping you avoid nasty fines.

Who You Rent to Makes All the Difference

Perhaps the most important factor of whether or not you'll enjoy buy and hold investing is who you rent to. Be prudent and patient when looking for tenants to avoid headaches and help ensure that you receive the rent you’re due in a timely manner. To be clear, we are not advocating profiling potential tenants in any way. You should simply make sure that your tenants are nice people, and their financial and criminal histories check out before handing them a lease.