When it’s done right, investing in property to rent out can be a lucrative way to make money. It can even be a passive income if you have managers in place to help you run the business and take care of the properties. However, the key is that it has to be done right. Investing poorly or not thinking things through can cause many problems, and might even mean you have to sell or foreclose some or all of your properties in the end. If you want to avoid this issue as much as possible, read on for some good ideas about how to invest well in property and be a successful landlord.
Buy at the Right Time
There are good times to buy a property and bad times to buy a property, and understanding the difference is crucial if you want to make a good investment. Buying at the wrong time means you’ll pay too much for the property (which makes it hard to make a profit through rental income) or you’ll not be able to get a good mortgage deal (which makes the mortgage more expensive per month, and the same issue with profits occurs). You might also find that there aren’t many properties to choose from, meaning you buy one that isn’t suitable.
Waiting until the time is right when there are plenty of choices, good mortgage deals, and you know you can make a profit might be hard when you are keen to get started or to buy the next property for your portfolio, but it’s also essential.
Don’t Be Scared to Sell
If you are a landlord, you might assume that you will hold onto any properties you own for the rest of your life, or at least until their mortgages are paid off. However, although this can be a good idea, it’s not always the right option. Sometimes, it’s better to sell a property to move forward and make more profits.
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Perhaps you bought a cheap property in a less expensive area to begin your landlord career, and perhaps it doesn’t bring you very much profit. Maybe you’re breaking even, or worse, losing money. In this case, it would be wise to sell that property and buy one that will make you more profit. If the market is slow, you can still make this all-important move by using hard money loans to help you bridge the gap between buying and selling.
Review Your Rents Regularly
When was the last time you looked at the rent you’re asking for each property you own? Maybe you do it every time you need to find a new tenant, but a lot of landlords don’t – they’ll just stick with the amount they’ve been asking for, perhaps for many years. Even fewer landlords have an annual review of their rental income. However, if you want to make the most of your investment, you need to review your rent every year. It might be that the market has moved forward and you’re being left behind.
It can indeed be hard to ask your tenants to pay more rent, but having a management company to help you do this will be a big positive, and it does mean you’ll be making the money you should be making.
