Updated May 5, 2020
Investing is something many hear about, but few do. The market crash of 2008 still has many people stashing money in their drawers and savings accounts, rather than compounding their savings with investing. Many don't realize is that there is a type of investing where investors can profit during market crashes and yes, even pandemics,— it's called real estate investing.
The Potential Of Real Estate Investing
Many don't realize the potential of real estate investing. You can buy a property for a good price, put some TLC into it, and rent it out. That will give you a bit of monthly cash.
As the market rises and more opportunities come your way, you may choose to sell or exchange that property for several others, compounding your investment in a few years.
The best landlords start out getting their hands dirty. They locate the properties, fix them up, and rent them out. At first, they'll do the tenant screenings and manage the deposits. They may even field the first late-night tenant calls and show up in eviction court. Getting this intimate with your rentals provides you with invaluable information that you need to be profitable as a landlord. But you can't do it alone forever.
According to a recent study conducted by Transunion, the average landlord owns and manages three rental properties. Of the landlords surveyed, as many as 50% of them said they depend on the income they make from these rental properties. Whether starting out or a seasoned investor, you want to make sure that your income or savings is always accounted for after all of your expenses are paid. Ideally, if you can run your rental business on half including debt service, you should be clear to use the other half as income.
If you have rental properties and need the income to live on, doing everything from repairs to screening tenants yourself is out of the question. There is not enough time in the day. You’ll need the best team possible to make your money work for you. Here are the top services all great landlords should have.
The Top Services Every Landlord Needs
A Real Estate Agent
A reliable real estate agent is the forerunner of your team. They should be an expert in the market you are planning to buy or sell in. They should also have experience working with investors. Your real estate agent should be able to look at properties and help you analyze them.
They should know terms such as cap rate and be able to point to aspects of the property that will make it more or less appealing to a renter or buyer.
If you are investing out of state, your relationship with your real estate agent is more crucial than ever. They will be your eyes and ears in your initial property search. You want to have the best information possible before making your decision on a property.
Take the time to interview many agents. You may even show them a few properties and ask them for some high-level feedback about the neighborhood, income level, and their experience with properties in that area. Don't skimp on this member of your team-- you'll want nothing less than an expert.
A Leasing Agent
A leasing agent is the face of your business. They will be the first to meet your potential renters and your current renters' point of contact. For this reason, you'll want someone pleasant, driven, and is excellent at following up.
A primary responsibility of your leasing agent will be to market your property. A key aspect of renting out your units is finding the sweet spot for rent. As an investor, you should already be making constant rent comparisons for potential properties to find the best opportunities for investments. Do your leasing agent a favor and use a tool like Rentometer to estimate your rental comparisons ahead of time to make the marketing process much more smooth.
A General Contractor
Chances are if you own a rental, there are going to be repairs needed. Many landlords don't think to look for a contractor until they need one. This is an issue because a good contractor is hard to find. If you ask other landlords, finding a good general contractor is probably the single most challenging thing on their list.
The key is to look for a general contractor before you need one. The right contractor will show up on time, do quality work, and communicate on deadlines, prices, and materials required. A contractor that fits these criteria is going to cost you-- but it's worth the price. Most investors would rather pay extra to get the project done right the first time than pay for another contractor to fix the project later.
Ask your local hardware store for recommendations of contractors they would call to repair or renovate their own house. Because they interact with general contractors daily, the clerks at the hardware store should be able to point you in the right direction. It's also a good idea to ask for recommendations from trusted friends and family who have recently worked with a general contractor.
A Mortgage Broker
You are going to need money to invest in real estate, so having your favorite mortgage broker on hand is crucial. Your mortgage broker will be the first person you contact when you are looking to make a deal. They will help you to figure out which loans you qualify for and will help you determine how much funding you'll have on hand.
A good mortgage broker will be able to answer your questions about closing dates, basic terms for your loan, such as interest rate, Loan-to-value, and length of the term. They will also be able to tell you if they consider the assets you are considering as stable, based on the data they have available.
An Insurance Agent
Your insurance is what will protect your investment in the long term, and every investor should have a good insurance agent. Take the time to get referrals from other investors and do your homework to make sure you aren't overpaying or over insuring your property.
Your insurance agent should be able to help you find the insurance policy that is right for you. They may even be able to offer you opportunities to save on your insurance by bundling or receiving safety discounts for smoke alarms.
Your agent should also be helpful, and make you aware of lesser-known coverage that benefits investors at a small cost per month. Choose an insurance agent that is available and approachable. You want to feel completely comfortable knowing your asset is safe, and you are getting the best coverage possible.
Don't Have These Services? Get Them Today!
Investing in real estate can be a lucrative way to build your portfolio and make the most of your savings. Once you jump into real estate investing, having access to the right services can take your business to the next level. Each of the services we've mentioned has helped thousands of investors reach their investment goals and can help you, too. If you're a landlord who doesn't use these services, we encourage you to try them out today.
Are you looking to list your business to landlords and property managers? List your business in the Rentometer Classifieds today!
Author Bio: Andrew Schmeerbauch is a St. Louis native, real estate blogger, and Marketing Director at Clever Real Estate. A nationwide real estate brokerage that helps home buyers and sellers save thousands in real estate commissions.
If you liked this article, subscribe to Rentometer's email newsletter to stay up-to-date on the latest trends in rental housing.