Posted by: dagmarsands | September 8, 2021

Real Estate International Inc. — September 2021 Newsletter

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Fundamental Steps to Becoming a Real Estate Investor

There’s no question that real estate investing can be an excellent way to add passive income and grow wealth over time. But with the many benefits come potential risks, particularly for first-time investors. It’s essential not to overlook these risks and to prepare as thoroughly as possible before diving into a purchase. Dagmar Sands has some practical tips for anyone looking to begin a venture in real estate investment.

Know the Risks  

As with any type of investment, purchasing a rental property comes with many risks. The key is to know about potential risks before you commit to any specific property, especially those that are most common. For example, first-time investors often overestimate the fair market rent in their area. This leads to overcharging rental rates, which can result in negative cash flow.

SFGate notes that another factor that’s often overlooked is unexpected repair bills, particularly extensive repairs. This is one reason why professional home inspections are so vital. Real estate investors often come across unforeseen problems that require large and expensive repairs, such as the HVAC quitting, pipes bursting, or the roof failing.

You must also be prepared for vacancies. While researching vacancy rates in your area is important, a low vacancy rate doesn’t guarantee that you will always have a tenant. Depending on local market conditions, it may take you longer than you anticipate to land your target tenant, yet you’ll still be responsible for paying property taxes, the mortgage, and maintenance costs.

Establish Your Rental Business

If you go through the risks and determine that real estate investment is the right move, then it’s time to make your business official. The formation process involves taking legal steps, which vary depending on which state you live in. Most likely, you’ll need to fill out and file documents that are required by your state, which can take anywhere from a few days to a few weeks to process before confirming your business. To make establishing your business easier and less stressful, you can utilize low-cost company formation services.

Prepare Financially

You’ll also need to begin taking any steps necessary to secure a stable financial footing. If you have any high-interest personal debt, come up with a plan to eliminate it as quickly as possible. Since you will need to pay at least 20 percent down on investment property, you should start saving for a down payment now. And you also want to have cash in reserve to cover unexpected repairs, reduced rental income, and other unforeseen costs.

Boost the Property’s Appeal  

Once you choose a property, you need to make sure it is desirable to your target tenants. Ideally, you’ll evaluate a property before purchasing it so that you’ll know exactly what kinds of repairs and improvements to budget for. The key is to start with upgrades that guarantee a good return on your investment.

For instance, if there is not a fence surrounding your property, that is an upgrade that is sure to attract renters. And you can easily connect with local contractors that will make the process easy and stress-free. Research contractors in your area to read reviews and find companies who offer credits and discounts on new fence installations. Then, meet with a few candidates, get quotes, and choose a contractor who will best serve your needs.

Here are some other home improvements that will make your property more desirable:

  • Replacing the front door
  • Replacing the garage door
  • Upgrading your appliances
  • Refinishing hardwood floors
  • Enhancing curb appeal (e.g., landscaping, replacing the mailbox, painting the exterior, etc.)

Manage the Property Well

Finally, purchasing an investment property is one thing, but managing it is another. If you have a knack for performing basic repairs and landscaping, it may be feasible to manage one property. But you also have to be OK with determining rental rates, communicating with renters, and potentially confronting renters about certain issues. Many investors find it worthwhile to hire a property management company to handle all of these tasks and more.

Now is a great time to invest in a rental property. Just make sure you understand the risks involved and establish a strong financial position for yourself before making a purchase. Also, leave room in your budget for any necessary improvements to the property, and ensure that it’s managed well. While there is much more involved in buying your first investment property, following these tips will get you off to a great start.

If you’re currently searching for a property for your rental business, Dagmar Sands is here to help. Explore up-to-date listings on the website, email her at, or call (404) 313-3456 today!

This article is written by Suzie Wilson, and pictures are from Pexels.

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