Adding a single-family rental property to your real estate portfolio is a great way to mitigate risk and expand your experience in the market. Many long-term investors prefer single-family rental properties for their flexibility and consistent income. Need some tips to learn how to invest in a single-family rental property? We’ve got you covered below with all the fundamentals for first-time single-family rental investors.
Tips for First-Time Single-Family Rental Investors
It can be intimidating for any first-time real estate investor to take the leap and commit to a single-family rental. Here’s all the tips for first-time single-family rental investors to help maneuver the market and maximize your ROI.
There is an endless amount of options for an investor to get their feet wet in real estate. Identifying and understanding each option and finding the right one for your strategy is the key to success. If you find the time is right to invest in a single-family rental property, you’ll find that they make a great addition to your portfolio considering these properties offer diversification and consistent income. Never rush into an investment; always research different strategies, funding options, and markets before making the final decision to acquire a single-family rental.
Pick the Right Location
The location of your property is one of the most impactful factors on the return of your investment. To gain the best return, you should conduct thorough market research about the location of your single-family rental property before finalizing the deal. Some factors to consider in the research process include:
- Walk-ability to entertainment, food, etc.
- Occupancy rates
- Current supply and demand in the area
- Average revenue for rentals in the area
- Crime rate
A good location means high demand for rentals in the area; which translate into less time spent hosting a vacant property.
Don’t Limit Yourself Geographically
In this day and age, as an investor you are no longer restricted to investing in your immediate area. When scoping out potential single-family rental properties, don’t limit yourself geographically to a specific location. Research various parts of the country to see what best fits your investing style. You might find that other areas offer a better return on your investment.
Create a Timeline
Whenever you invest into a new property, you should create a timeline that establishes your goals with the property. Having a clear timeline ensures you’re staying on track with your investment. Since real estate is not a liquid asset, creating a timeline helps many investors reach their goals throughout their ownership of the property. Having more control in your investment strengthens your strategy and lowers your overall risk.
Know Your Investment Strategy
There are many routes to acquire the appropriate funding for your investment property. Depending on your personal credit, current assets, and income, you’ll find that some solutions fit better for your situation than others. With hard money lending, you can get funding quickly with more flexible loan qualifications. Knowing your investment strategy will help you find the right funding option that matches your investment and personal goals.
Maximize Your ROI
Did you know there are certain steps you can take during your investment process to ensure you maximize your ROI? To get the most out of your single-family rental property, you should aim to prioritize tenants needs, choose reliable tenants, and keep up with property maintenance. These steps are the ones that veteran investors value deeply in their strategy, helping them to mitigate their overall risk and maximize their property’s income and return-on-investment.
RCN Capital offers short-term and long-term financing options for real estate investors. Whether you are looking to fix & flip properties or hold properties for rental income, RCN has flexible options that are suited to your needs. Connect with us today to discuss your next real estate investment.