Not everyone is meant to live a nine-to-five job. Between the tiresome commuting, the mundane work, and the unnecessary overtime periods, it becomes easy to want to resign and start your own business instead.
Becoming your own boss sounds like a good idea, right? Most people are afraid to take the chance because of the financial risk it involves. After all, you are leaving a steady job with consistent pay for a startup business with multiple unknown variables. It’s easy to feel overwhelmed and scratch the idea completely.
But what if we told you that there is a good business idea that rarely ends in financial loss, while only increasing in value as time goes by? This is where the rental business comes in.
Real estate is known mostly as a “safe” investment because the value of property only keeps rising with time, provided that you do your part in taking care of it. To start a rental business, you have to invest in real estate by purchasing a property and rehabilitating it to create a residential apartment.
What Would I Need to Start?
There are two things you need to have to start this endeavor, and those are passion and commitment. The rental business is a long game, and you should not expect to get your money back any time soon. You will lose money when you buy the property, and you will spend even more as you upgrade and refurbish the house. Once you start renting it out, the money will come in, but in smaller increments, and even after a couple of years, it might not be enough to break even. The goal is to keep the business running as long as you can to maximize the profit that you make long-term.
When you invest in property, you need to be prepared to lose a good chunk of money for the initial purchase. Properties rarely come cheap, so unless you have a significant amount in your savings that you are willing to put out for your purchase, you will have to find a way to secure enough funds to start off the business.
Banks are well aware of how profitable property rentals can be, and they will be more than happy to help you get your investment with a loan. Before signing a contract, make sure that the terms are agreeable with what you plan to do in your business. For instance, check the monthly mortgage that you will need to pay the bank. If you feel that you can’t realistically meet the demands of the contract, it’s alright to walk away and find other options. There are several lenders and private investors who might be willing to hear you out with a friendlier deal.
Okay, I have the funds ready. Now what?
Congratulations on securing the money! Now, all you need to is buy the property. Hopefully, you already did your research on the local market and looked out for good deals while you were applying for a loan.
It is ideal to buy a property that is being sold at a price lower than its actual value. The less money you spend to purchase the house, the more money you can use later to renovate it and make it look good.
When looking for cheap deals, make sure to do a full inspection before completing any purchase. Although it might cost extra, hiring a professional house inspector should help prevent getting fooled by false marketing and misinformation. You’d rather pay for safety gumboots with steel toe caps as you walk into an unknown marsh instead of stepping in barefooted only to discover how slippery and dirty the water is.
I’ve bought a house! What do I do now?
Once you have finalized the purchase of your property, it’s time to focus on renovations. When adding modifications to the property, you need to know which parts you can skimp on and which parts you should put a premium on.
Important features of the house, such as the electrical and water connections, should be given proper care. You can cut costs on other tasks such as painting the walls and cutting the grass by doing them yourself but make sure to hire professionals when necessary. Hiring qualified contractors will save you a lot of time while also providing quality work to make your house look better.
Before hiring a contractor, it is best that you already have a complete idea of what you want for your property. You should have all the details written down from the get-go so that you and your contractor will have an easier time agreeing on prices and on working together to remodel the property.
The house is ready for occupancy now. How do I get tenants?
After you’ve successfully renovated the property and made it attractive enough for tenants, the next challenge is to actually rent it out.
You can place advertisements online or through posters to inform people that your property is for rent. Make sure that your rental fees are competitive enough by comparing it with the average rates in your area. If your property is beautiful enough with affordable rates, tenants should start flocking to your doorstep soon.
Rental property is a good investment because, unlike other ventures, you can never go bankrupt. With the population of the world increasing consistently, you also don’t have to worry about losing out on tenants anytime soon. After investing and working on the property, all you need to do is wait for the monthly rent as you sit on your couch and watch TV. Of course, you’ll need to do maintenance and pay for upgrades now and then, but the stable income without the stress of working every day should be well worth the ordeal.