1. You Need to Be Trained By Real Landlords
Investing into one’s real-world real estate investing education is priceless and will save you thousands of dollars in the long-run. Most real estate investment mistakes come from a lack of understanding the fundamentals that govern real estate investing strategies, especially rental properties. To be an effective long term rental property business owner requires that you understand how to buy a property correctly, ensuring the that the property will cash flow by at least $250 per month on a single family residence including (maintainence and property management fees). Even if you are planning on self-managing the rental properties, you want to make sure that you negotiate the purchasing of the properties factoring in a 10-12% line item expense for property management. This way if you ever decide to out-source the management services you are still cash-flowing a minimum of $250 per month. Where most new investors make mistakes is not running their number correctly, negotiating correctly, and they may obtain a gross cashflow of $250 per month, but after they factor in maintainence and property management services fees, there effective net cash flow is a barely break even. Education offered by ReiEdu2go teaches students the fundamentals of real estate investing and specific landlording strategies to ensure that when the new rental property business owner buys, improves, and manages the properties that they are maximizing their cashflow and hedging against line item expenses.
Often times, the education and mentorship will increase the odds of success for the aspiring rental property business owner and reduce their stress levels. Those who skip the priceless educational training route often times end up in a frustrated landlording position.
A properly structured real estate investing education for rental properties will teach the student how to address these common questions:
- What’s the procedure for starting a rental property business?
- How can I get funding?
- What’s the rental potential?
- How’s the competition?
- Am I ready to be a landlord?
2. Get a Team of Mentors
If you want to start out well, it’s vital that you seek mentorship help. This is especially important if you are just starting out in the rental property business.
An Mentor, among other things, will help you:
- Implement your educational training experience
- Evaluate the Numbers
- Negotiate and Hedge When Buying Properties
- Evaluate the Market and Gross Rents
- Budget Repairs and General Maintenance
- Sourcing Suppliers and Contractors to Improve Property
- Evaluate Insurance Policies and Coverages
- How to avoid common pitfalls
- How to set up your day to day operations
- Provide connections or resources for professional help (Tax and Legal)
3. Adopt an Existing Business System
In any business, experience is valuable. We reached out to Rescue Team Properties® to get some more insight on this process. They said, “If you feel you haven’t learned much from doing your homework, you should consider working with an established rental property business.” The folks at Rescue Team Properties® give each student a virtually turnkey business system with mentors to help incubate the new business into a successful rental property business within their city of choice.
4. Setting Up Legal Asset Protections
Registering your business is the first step to formalizing it. Registering your business basically means you’re listing it with the right local, state and federal agencies to gain official business status.
The corporate affairs offices or the chamber of commerce office is where you can get the ball rolling for your small business’s registration. Defining the type of business is important. Is it a partnership, an LLC, or a sole proprietorship?
5. Set up your home office
Working from home offers many advantages. You get to save on gas and time and be able to enjoy the flexibility of setting your own schedule.
And according to Home-Based Business For Home.org,
- Seven out of ten home-based businesses succeed in the first thirty-six months as compared to three out of ten regular businesses.
- Entrepreneurs start a home-based business every twelve seconds.
- America is home to over 38 million home-based businesses.
Here are the most important things to consider when setting up your home office.
- Colors. The psychology of color is real. Color impacts mood and energy levels.
- Ergonomics. Your welfare, safety and health are critical. Consider soft keyboard pads, foot rests, and ergonomic peripherals.
- Layout/organization. Organization is key to productivity. Make sure your desk surface is designed to properly accommodate your desktop and/or laptop computer and work-related items.
- Lighting. You should strive for as much natural lighting as possible.
- Equipment. This includes a computer, internet connectivity, color laser printer, phone line, copier, key box management system. Make sure you invest in efficient equipment. Also, don’t forget to insure these.
6. Leverage an Existing Virtually Turnkey Business Plan
Each step of the way, you can check online for resources like ReiEdu2go™ to effectively launch a business. Now that things are looking up, the next thing would be to adopt the business plan and incubation of that plan. An existing virtually turnkey business plan will help you focus on money making activities and be in a strategic position to rapidly grow.
When looking to create a business from scratch here are the items that most business plans should have within it. Just because a business plan is written doesn’t mean that it can be implemented quickly and accurately. That is why most business plans, especially home-based business plans are not effective.
- Company description and executive summary. Emphasize what sets your business apart from your competitors by defining your company’s mission and vision statement.
- Projections on income generation. Set realistic expectations for the rental income you’ll be earning. It’s always better to be conservative with your figures.
- Miscellaneous. Remember to also include costing and financial projections, management techniques, expansion strategies, SWOT analysis, rental unit pricing, and advertising strategy.
7. Learn How to Acquire Deeply Discounted Properties
The first step is to learn how to acquire deeply discounted properties and how to properly fund them. There are several strategies to consider and funding is quite easy to obtain in today’s market as long as the property meets the funding sources requirements. Once you have acquired the deeply discounted properties and ensured that after the improvements that you can comfortable net a positive cash flow between $250+ on a single family residence including (property management service fees) then you are reading to start the marketing phase.
8. Market the Property For Rent
Marketing your rental properties is key to having them rented quickly. There are many ways that you can market your rental properties.
- Use the power of social media. Social media is king when it comes to advertising your rental property.
- Make use of property listing syndication. The goal here is to increase exposure for your rental properties.
- Create a video tour. This will make your rental business stand out from the others.
- Use quality pictures emphasizing the benefits of your rental. The more pictures, the better.
- Write a catchy title, property description, and great photos.
9. Set the right rent price for your rental property
Typically, the rent should fall between 0.8% and 1.1% of the property’s value. Here’s more info on how to value your rental property potential average gross rents. www.rentometer.com