Investing into rental properties is all the heat nowadays. Whether you are a seasoned real estate investor or are a beginner in the field, chances are you are interested to put your money into a rental property.
Rental properties come in many shapes and sizes, moreover there are different types of them. firstly there are residential rental properties; where people settle for their homes or as a temporary living space to accommodate themselves better in a city. There are a lot of people who cannot afford to build their own property when moving out, so they start to live into rental properties to ease themselves, moreover persons moving to bigger cities or to a different city in search of better lifestyle and job opportunity will also be gravitated to live into rentals. Residential forms of rental properties can come in either apartment style buildings and flats or lone standing houses. Particular hotspots in rentals are as expected; house for rent in Islamabad, Lahore and Karachi alongside the commercially important cities of Pakistan.
On the other hand we have commercial rental properties. Many business investors may look to a specific area to establish their business setup but they don’t want the hassle of investing to buy out the property or find it more convenient to rent an office or work space, they look to commercial spaces open for renting. Moreover shops owners might also take up to an area in which their business can flourish better in; for example a stationary shop nearby a school or a residential area. Owners of commercial plazas or real estate investors specifically do buy commercial properties to put up as rental spaces and generate passive income to their own profit.
If you yourself are looking to invest into rental properties we have enlisted some things to consider for you before you invest to assure your chances of success:
It is not the most optimal strategy to straight up buy a property and then label it as a rental. Planning beforehand will help ease the process. Planning should be done on the basis what kind of property are you investing into; be it residential or commercial and then for what demographic are you choosing it for, say; a house for rent in Islamabad, then consider whether it is for college students or a joint family.
Calculate the ranges of you budget beforehand; you do not want to aim higher than your expectations and end up in debt from purchasing a property that does not generate much income. You can also speculate beforehand how much rent can you generate from the said property you are interested in buying and weigh the costs and expenses beforehand to avoid any regrets about investing in a rental.
Management of a rental property can also be quite taxing. You can be a real estate business owner with multiple property deals going left and right but a rental can easily take up most of your energy in managing it. So ask yourself this: can I afford the time to manage my rental property? Or alternatively: do I need to hire a management team to look after my rental properties? Queries addressed to yourself need to be answered for assuring a smart and successful investment.
Can you become a Land lord?
This is further tying in with the pressure of property management. Landlords being property owners have some obligations to fulfill. In case of rental properties; the responsibility of property repairs typically falls in the share of the landlord.
You will have multiple options to assure these responsibilities are fulfilled. Firstly you can equip yourself with some simple house repair skills to save money as a landlord. But when we are talking about a person who owns multiple properties and is well invested into the real estate business; they won’t have the time to carry out such duties. The best option to go for there is calculate the expenses of hiring either a real estate dealer or trustworthy repairmen to monitor the smaller house repairs. Moreover if you have multiple rental properties located nearby; a good option is to hire a team of professionals that can deal with repairs and management throughout the building. Alternatively, lend the responsibility of a landlord to a hired real estate agent that can deal with such management issues.
Pick the best location:
More or less, location is the golden rule of success in any real estate investment. Always try to look for rental properties in a location that will get more traffic from real estate investors and will attract more tenants.
A good observation to make regarding the importance of location is that it should hold both lifestyle and commercial opportunities for the residents. An area that provides an opulent living experience such as those of well planned and organized societies as well as areas that hold good commercial services and workplace offices gets the most attention from investors.
Moreover location is also important in relevance to the accessibility of areas nearby, a secluded society placed in corner of a big town or city will not be as attractive for people looking to rent a residence as compared to a location that is located amidst of a big city and interconnects its important parts.
Hire a real estate agent:
Real estate agents are professionals that deal with property matters. They are highly skilled and equipped with all the necessary tools of initiating, managing and processing any real estate deal. Property managers in terms of buying a rental can help you in two ways.
Firstly real estate agents can help you locate the best place for you to invest in. in the present day; where the real estate market is growing by the day; the spectrum of options is massive. It can seem quite daunting for a person to set out for the search of the dream area to invest into rental properties. Real estate agents come with the experience and skills to search you the best area. This can really help ease the process of buying a rental property and save you your time and energy.
The other situation where a real estate agent can help you is in the future managing of your real estate property. Management of rentals, as discussed before, can be a big hassle for the landlord. A real estate manager already has the experience needed to look after a real estate property. In case you are too caught up in other business and work related things or want to make time for your social life; hiring a real estate agent can be a great solution to your troubles.
However it should be noted that hiring a professional and well reputed real estate agent adds to the investment costs of your property. Moreover finding a certified and responsible agent to hire is also your responsibility in the first place in case you are not taking help of an agency.
Buy low cost properties:
When it comes to rentals, buying low cost properties can go a long way for the investor. Firstly rentals are mostly considered a temporary living space for people and people themselves try to look for low budget spaces. Other than that mostly middle classed families settle into rental houses not being able to afford their own, so they are also less likely to rent out a more opulent living space. Buying lower cost rentals can also greatly benefit the owner in the long run as smaller and cheaper properties take less on their household repair costs as well. A house for rent in Islamabad that is located in a middle classed area with a commercial hub gets more attention than being located in a luxurious planned society project.
The biggest advantage of buying low is that you can achieve financial security. Take an example; where you are a beginner in the real estate business and you spend a lot on a single property for rent. However due to some unfortunate circumstance, or hasty decisions; the rental does not get much popularity; will put you at a greater risk of losing your investment. On the other hand for a person that started out from investing in low cost spaces for rent; even if the place is not being put up for rent; the investor is able to bounce back a lot easier from a smaller loss.
Rentals can greatly benefit a person whether they are a property owner or are a real estate business investor. The different types of rental properties come with varying benefits for people. There is a need for a strategic approach when trying to buy your first rental property as well. Considering the availability of time and money for the repairing costs. Moreover weighing the pros and cons of investment in said rental property. Buying the property at the best possible location and then if it seems to overburden you; hiring a professional real estate agent to your aid.
Most important of all these is evaluating beforehand, other than diving right into buying out a rental property. It may seem relatively risk free when investing into a property that has to be put up for rent, but making smarter decisions in your investment will go a long way towards the property’s success. We hope that you learned some tips before you buy your first rental property.