As a property owner, you’ve got a valuable asset that has the potential of giving you a steady passive income. However, the process that leads to more income generation on your property isn’t an easy venture. As much as you can make money with it, if you don’t have proper knowledge on how to make money on rental properties, you’ll end up having a depreciating asset if properties around that area are facing depreciation.
To learn more about renting properties out as a landlord, we’ve compiled some basic tips you may want to consider in your journey through investment in apartments.
Research Home Prices and Rent Prices
You need to get familiar with the real estate market in your locality. One of the ways to get familiar is to research rent and home prices. That way, you’ll discover the value to place on your home when relating with potential tenants.
You can find agents who are knowledgeable about rental and the local real estate market to help you with some insights on apartment investment and market rental rates in the US. Also, a quick Google search will get you the information you seek.
When deciding your rent price rate, bear in mind the cost of maintenance and repairs as well as other fees that may come up. Other fees may be property management fees, landlord insurance property taxes, amongst others. These fees usually eat a significant chunk into the overall rent fee you’ll receive from your tenants.
Hiring a Property Manager
Questions always come up from both prospective homeowners and landlords as to whether it’s advisable to hire a property manager to handle their rental property. The truth is, hiring a property manager largely depends on your schedule, how many properties you have, and the kind of influence you want to have over your property.
When you let a property manager handle your rental, the day-to-day operations and responsibilities are removed from your to-do list.
Your property manager takes over some tasks like:
- Marketing your home
- Vetting your tenants
- Contract signing
- Collection of security deposit
- Property walkthrough
- Handling of tenant-related issues
You no longer have to do any of the above-listed tasks other than keeping your side of the initial terms and agreement. If you’re new in the property rental business, you may want to consider hiring an experienced property manager to maximize the value of your property by finding and vetting tenants quicker than you’ll likely do on your own.
If you have more than one apartment, invest in the services of a property manager as they’ll help keep a proper record of those properties than you would, except you’re also experienced in the area yourself.
Consider Location When Buying Property for Rent
For obvious reasons, a house in a sought-after location will rent faster than the ones in an out-of-place location. While getting a property for rent in a commercially viable location can be expensive and competitive, it’ll be worth it in the long run.
A house in a location with access to important amenities like shopping centers, entertainment, school districts, and reasonable safety level is an important factor. It makes properties in these locations a hot cake.
While it may be difficult to find a home that ticks all the boxes, getting property in a location that people want to live in will give you an edge in your rental investment.
Ensure to engage your local agent to help you discover the ideal available properties that you can get for your rental business. Getting your agent to help you is important because they tend to understand the real estate market better and can give you additional insights that’ll enable you to seal a deal on your sought for property.
Take Opportunity of the 1031 Exchange
If you’re thinking of selling your property for reasons like the location of the property or its depreciating value, you can take advantage of the 1031 tax defective exchange.
The 1031 exchange name is derived from the US Internal Revenue Code. This exchange allows you to sell your property and buy another property of like-kind while deferring tax on the capital gain obtained from the property sale.
There are various benefits of utilizing the 1031 exchange. Some of which are:
● Resetting the Depreciation Clock
Every property has a depreciating value that gets written off every year due to the wear and tear of the property. As such, exchanging the property for one with better value will increase the overall value. Also, property with better prospects helps increase the potential for more income.
The 1031 exchange helps reset the depreciating value of your real estate property.
● Opportunity to Change to a Better Location
With the 1031 exchange, you have the opportunity to sell your rental property that’s in an out-of-place location for a property that is in a commercially viable location.
However, the main benefit of the 1031 exchange is the tax deferral that allows you to invest in a bigger and better property. Your how to make money on rental properties without including 1031 property exchange and the best part is, not many real estate investors are aware of this goldmine.
You may be wondering how long do you have to rent out a 1031 exchange property. You can rent out a 1031 exchange property as many times as you want, depending on who your target customer is.
Note that the 1031 exchange allows for only like-kind property. This means that you can’t exchange your real estate property for artworks, intellectual property, or crypto investment.
It has to be similar. For instance, you can sell a property in exchange for land, a real estate property with more value, or apartment buildings.
To get more insights on how to make money with rental properties, align yourself with reputable brokers who’ll maximize the market potential and make your journey through real estate property rental a seamless and hitch-free ride.
With an experienced broker, your query on how to make money on rental properties will be speedily answered.