Investing in Rental Property

[awsmith4]

I run a rental management business and my number one piece of advice is to perform proper background checks on all applicants. This includes criminal history, credit history, landlord referrals and rental history. Not everyone I rent to is a perfect candidate but you can make a more informed decision. There are a good number of companies that perform this service and the cost is generally $15-35 per report and is worth every penny. If you want to save the cost to yourself, charge an application fee.

Next make sure you understand landlord/tenant law and equal housing laws. Follow them to the letter and you will avoid most legal issues.

Check with your local chapter of NARPM and see if they allow non members to attend the seminars and classes. They are a wealth of knowledge for property managers and landlords.

Last, learn to be fair but firm. This may sound like an easy thing but I have rescued so many landlords that just wouldn't stand up to their tenants. You have a signed agreement with the tenant, make them follow it.

If you want to start sooner check out Homepath.com for a list of Fannie Mae foreclosures in your area. You can then find a lender that participates in Homepath loans and they even have options for investment borrowers and renovation loans.

Be leery of condo purchases. Condos often have association fees which can be as much or more than your mortgage payment. This can seriously eat away at your profits. I am not saying that all condos are bad investments but its something to watch out for, same goes with homes that have HOA fees. On that note, make sure that if purchasing in a subdivision that the HOA allows rentals.