Renting out properties is one of the best ways to create a passive income stream. It might seem a little overwhelming at first, but with a little planning, you too can start renting out homes now! Check out our latest blog for tips to get started now!
4 Steps to Start Renting Out Homes Today in Detroit
Step 1: Launch Your Business
Treat it as if you were opening a business… because you are. Put together a proper business plan that covers all aspects of your endeavor. Fully outline how you will finance your projects, and how you will manage vacancies and other situations. Do you have cash on hand or will you need financing? A lender will need to see the ability for you to make a profit by purchasing the rental. Having a cohesive plan will help motivate lenders into working with you.
If you don’t have the ability to access the capital you need, it might be time to partner up. Create a partnership with a silent investor. They put up the cash, and you handle the leg work. A contract will need to be signed that clearly states what each party is entitled to. Many successful partnerships are formed in this manner.
Step 2: Do Your Homework
Really know the area you want to invest in. Pay attention to the surrounding neighborhoods and keep your eye on what rent prices are doing. What is the average rent? How long do properties typically stay vacant between renters? What are the demographics? Young singles or families? What can you do to appeal to them? You should do significant research before purchasing a rental home. Know who your ideal tenant is, and find the property that will appeal to them. If you can’t answer questions about the market, call a professional and ask! We are happy to share market data so you can invest in only the best rental properties!
Step 3: Find The Deals
Instead of paying full price for a single family home, go to where the deals are. Look into purchasing tax liens or reach out to people who have fallen behind on their tax payments. If they aren’t able to pay their taxes, they might be more inclined to sell to you at a great price! The HUD website offers links to foreclosures, which is being updated constantly. Don’t buy a rental property with the same high standards you would when purchasing a home for yourself. Yes, it should be in great condition, but it does not need to offer every amenity you would want personally.
Step 4: Start With One
Start with a single family home or unit. Your first investment does not need to be a multi-unit apartment building. Start with one, and really get a feel for it. Learn about the costs and how much you are really making from the home. Can you handle the repairs, screening, and maintenance on your own, or do you need the help of a professional? Ideally, you will want to find long-term tenants as to decrease your turnover costs.
Once you are confident in owning one rental property, you can slowly begin adding to your portfolio. Multi-unit properties can offer lower CapEx costs and can decrease overall maintenance fees. Make sure you know exactly what you are getting into before purchasing a rental property. If you take some time to prepare, you can be renting out houses in no time!
Are you thinking about purchasing a rental property in Detroit? If so, we can help you find the best deals and answer all of your questions about the area. Send us a message now