11 Tips for Stress-Free Investing
Renters Warehouse Blog
11 Tips for Stress-Free Investing
Real estate investing can be tremendously rewarding, but it certainly has its moments.
Like those times when a tenant falls behind on the rent –or texts you a maintenance request at 2 am –or that time when the fridge, A/C unit, and stove all quit working –in one month.
But while there are plenty of horror stories out there sharing how stressful life can be as a landlord, the truth is that for most landlords, these moments are few and far between. The good, generally speaking, far outweighs the bad.
In many ways, managing a rental property is like having your own business. There are income and expenses, budgeting and legal issues, work to do and solutions to find. There’s a great deal of planning that’s required to make it all work, and ensure that things continue operating smoothly, but at the end of the day, just like a business –rental property can be a great way to generate income.
When it comes to investing in real estate, knowing what to expect and how to handle problems before they arise can go a long way in helping to reduce stress, and make owning rental property a profitable venture. With this in mind, here’s a look at some things that you’ll want to keep in mind for hassle-free investing. See you can help prevent common issues from arising; making your investments as hassle-free –and profitable as possible.
11 Tips for Hassle-Free Investing
- Educate Yourself
First up, make sure you take the time to educate yourself on the ins and outs of investing, and managing a rental –before you start. The more inside knowledge you’re able to gain, the less you’ll have to learn the hard way once you get started.
A few things you’ll want to brush up on are how to identify a good market, and what numbers you should run with each investment, along with strategies on acquiring and overseeing your investments. Keep in mind that when it comes to investing, educating yourself should be a lifelong journey –keeping up with changing legislation, tax regulations, and investment strategies is part of staying ahead when it comes to investing.
- Be Patient
Patience is the name of the game with investing in rentals and is especially crucial when it comes to managing that rental –especially if you’re going to be investing in multiple properties. The best way to gain patience is by having realistic expectations from the start. It’s important to realize that finding a good rental isn’t something that will happen overnight. Instead, it requires a lot of time and effort and research. Likewise, when it comes to managing a rental, it’s important to realize that things will break down and it will require maintenance and repairs. Property management is a hands-on job, and while it can be an excellent investment, it does require a commitment.
- Get the Right Insurance
Make sure you have the right insurance –and enough coverage too. If you’re planning on renting your own home out, you’ll want to ensure that you call your insurer to inform them of this change. Failing to notify your insurance company means that you won’t be covered for things like tenant damage or loss of rent. A good, comprehensive landlord policy will include coverage for property damage, lost rent, and liability protection –which will protect you if a tenant or one of their guests becomes injured at the property.
- Familiarize Yourself With Landlord-Tenant Laws
It’s also important for every landlord to have a good understanding of landlord-tenant law. This includes federal laws, as well as state and local legislation. Landlord-tenant laws vary considerably from state to state, and govern issues like security deposits processing and return, the eviction process, and some also have requirements on registration and licensing as well. On a federal level, laws like the Fair Housing Act are designed to protect tenants from unfair discrimination –so make sure your tenant screening policies are fair, and ensure that all applicants are treated equally.
- Carefully Screen Applicants
Before you give out the keys to your property, you’ll want to ensure that the people you’re letting in your home have been screened thoroughly. Running background, credit, and reference checks are crucial when screening new applicants. Just remember to always ensure that you screen in a way that’s in compliance with the law to avoid harmful accusations of discrimination. Your goal is to verify their ability to pay the rent and abide by the terms of the lease –anything else, including family status, race, gender, disabilities, and more are all irrelevant.
- Assemble Your Team
When it comes to managing a rental, you don’t have to go it alone. Enlisting the help of knowledgeable professionals can help to alleviate a tremendous amount of stress, and in some cases, may even be able to help you save money. For example, hiring a good accountant can help to alert you to valuable tax deductions that can help you to save on your tax bill, and enlisting the help of an investor-friendly real estate agent can help you to find a property that meets your investing criteria.
Professionals that you’ll want to consider having on your side include:
- Legal advisor
- Investor-friendly real estate agent
- Property manager
- Investment partner
- Perform Routine Inspections
While you most likely don’t want to spend all of your spare time at your rental, one important task that shouldn’t be overlooked is inspections. Be sure to follow state legislation, and always give your tenant adequate notice before showing up, but performing routine inspections can help you keep an eye on your investment while determining if there are any maintenance issues that need to be taken care of before they become worse. This approach will also help to give you peace of mind and reduce stress.
- Don’t Delay Maintenance and Repairs
Next up, don’t overlook the importance of routine maintenance. When you invest in a property, you need to expect maintenance and routine repairs. The heater will go out in the middle of winter. The freezer will give up in the middle of summer. Repairs will not always be convenient, but they’re just a part of property management and if you plan ahead, you can drastically reduce the stress that comes from being caught out by unexpected costs.
Don’t defer routine maintenance, and never put off necessary repairs. In most states –as a landlord, you’re required by law to maintain a certain level of habitability at your rental.
- Have an Emergency Fund
Perhaps the biggest source of stress for an investor is uncertainty. The expensive repairs that come out of nowhere, the prolonged vacancy, or a tenant who suddenly stops paying rent. It’s important to prepare for these unexpected costs so they don’t catch you off guard. Having an emergency fund set aside for these costs help tremendously when something comes up. It’ll also provide you with a sense of security, knowing that when something unexpected happens, you’ll be prepared. It’s advisable to budget at least 1% of the property’s value annually for maintenance and to save enough to cover expenses and loss of income for vacancies –budget for one month per year. It’s also a good idea to maintain a fund of 3-4 months’ rent to cover any unexpected repairs.
- Make Paying Rent Easy
Landlords like getting their rent on time, but many make it difficult for their tenants to pay! Instead of requiring a check, why not make it easier on both you and your tenants by accepting online payments or having your tenants set up a direct debit? Manually collecting rent is tedious and inefficient. Limit the amount of effort, stress, and time involved and make paying rent easy.
- Consider Hiring a Property Manager
Last but not least, if you’d like to eliminate most of the stress that comes from being a landlord, then you’ll want to consider outsourcing the job altogether. Enlisting the help of a reputable property manager will make owning rentals entirely stress-free. Not only will a property manager be able to handle the tenant screening process, but they will also handle rent collection, lease enforcement, maintenance and repairs, as well as the advertising and filling vacancies. If you’re planning on purchasing multiple properties, investing out of town –or just looking to outsource the hassles, many landlords will tell you that hiring a property manager is the best way to go.
At the end of the day, it’s important to remember that investing in rental property doesn’t have to be stressful or daunting. Instead, it’s an exciting opportunity –and something that has helped many investors to grow their wealth. It’s all a matter of establishing realistic expectations up front, and working hard to lay the groundwork for stress-free investing.
Then start working your way toward the financial freedom that comes from investing –without any of the stress!
Would you like to start growing your rental property portfolio, but aren’t sure where to start? Download your FREE guide today: Starting and Growing Your Portfolio the Right Way. Get started today!
And if you’re ready to start looking, head over to Renters Warehouse today and take a look at our Market Research Center. There you’ll find information on any housing market across the country, including information on population growth, housing appreciation, job diversity, and more.