When you’re investing in the Boise rental market for the first time, you’re hopefully feeling pretty good about your chances to earn short-term cash flow and establish long-term wealth.
You need to surround yourself with experts and learn everything you can about owning investment property in Boise. We have a list of 10 things you need to know when you’re a first-time real estate investor.
1. The Right Property Rents Well
Choosing the right rental property is an important way to set yourself up for success. It’s easy to get drawn into a gorgeous home with marble floors and granite counters. Those things are not necessary in a rental property. Similarly, you don’t want a total rehab that’s going to take months to renovate before you can rent it out. Choose an investment that’s in good condition, priced competitively, and ready to hit the rental market. It will rent well and get your income started.
2. Cash Flow May Not Come Right Away
It’s always a good idea to invest in a property that can earn you cash flow as well as appreciation. However, don’t be discouraged if you’re not in a positive cash flow space on month one. Even in an outstanding rental market like Boise, it might take some time to build that cash flow. Your monthly expenses may outpace your rental income in the first year or two. However, you’re still earning money on your investment and you’ll reach the point where your cash flow is higher thanks to rising rental values.
3. You Need a Great List of Vendors and Contractors
There are likely some cosmetic issues that need to be taken care of before you can rent out your property. Maybe it needs new paint or updated floors. Have relationships in place with your vendors and contractors before you need them. You’ll get faster service as you’re preparing your home and when you need work done while a tenant is in place.
4. Overpricing is as Expensive as Underpricing
New investors are often confused about how to price their rental property. You probably have an idea about what you’d like your property to earn every month, but the rental price is really market-driven. Establish a rental value that reflects the current market and doesn’t drive away well-qualified tenants.
5. Tenant Screening is Critical
The tenant you place in your property will have a huge impact on the success of your investment. Take the time to screen tenants carefully. Look at income and credit. Verify employment and past rental histories. Check backgrounds to make sure there isn’t a trail of prior evictions. You want a tenant who will pay rent on time, take care of your home, and follow the lease agreement.
6. This is a Business
Real estate is emotional. We’re talking about peoples’ homes. However, you have to treat the investment property as a business. Every decision should be based on data and business sense and your ultimate investment goals. Make sure you can take this approach before you invest. Otherwise, you’ll have complicated relationships with tenants and feel paralyzed about making important decisions.
7. Documentation is Critical
Technology has enabled a lot of automation and easy documentation. This is especially important when you’re renting out a property. You’ll want to track everything, including rental payments, inspection reports, tenant correspondence, and security deposit deductions. You need good accounting software, the right lease agreements, and a process for inspecting your property. Document everything.
8. All Maintenance is Urgent Maintenance
Most investors expect that emergency maintenance issues will require an immediate response. However, if you want to protect the condition of your property and ensure you’re able to retain good tenants, treat routine repairs with a sense of urgency as well. Deferred maintenance will only damage your home and drag down its value. It will also create frustrated tenants who feel like their landlord isn’t taking care of their responsibilities.
9. Get to Know the Fair Housing Laws
Fair housing laws are complex, and you need to understand them when you’re leasing and managing a rental property. If you don’t know the difference between a service animal and a pet, you could be in trouble. Document your screening and leasing process so you can’t be accused of discrimination. It’s easy to make an expensive legal mistake.
10. Work with a Boise Property Manager
Unless you have the time, knowledge, and experience to manage an income-producing property on your own, hire a professional Boise property manager. You need someone who knows the local market and understands the property management industry. Find a company that can accurately price the home, market it, and screen for highly qualified tenants. Look for a management company that has good relationships with local vendors and has a reputation for helping owners earn more and spend less on their investment.
These are just the first 10 things you need to know as a new investor. There’s a lot more to tell you. Please contact us at Wave Property Management.
Wave Property Management is a full-service leasing and management company serving Boise as well as nearby communities such as Meridian, Garden City, Nampa, Mountain Home, and Caldwell. We work with new rental property owners as well as established investors with growing real estate portfolios.