How to Choose a Second Rental Real Estate Property to Buy

A successful initial foray into real estate investing does several things. Firstly, it vindicates your beliefs. You have now proven that you could indeed do what you had believed you could do all along. It also gives you valuable experience which you can take forward into your next property investment, making that even more likely to succeed than the first one. Finally, it provides the capital, or at least the promise of capital, with which to fund your possible expansion.

There is always an instinctive belief amongst investors that a more expansive and highly leveraged investment always carries more risk. This is not necessarily the case in real estate. The conservative investor, who uses a lot of his own money, borrows very little, and then has occupancy problems for an extended time, is a good foreclosure risk for the lenders. There is plenty of equity in the property which they can instantly take back. A more aggressive investor, with a highly leveraged system, is actually more likely to survive an economic downturn, since there is little point in the lender seizing back a property which will give them a loss.

If they work with the investor through the downturn, they can still make significant long term profits. With this in mind, it is strongly advised that you leverage your investment. The downside is limited, and by having more than one property you are moving away from the situation where your entire portfolio is either 100% occupied or 100% empty. All the time, you are reducing the amount of risk which your business is subjected to. Your long term goal of a stable and dependable income.

It is also a good idea to build on the success of the first property by staying very close to it geographically. You will save money on maintenance and administration by reducing the distance between the properties, and you could also find that the good tenant in the first property has friends of a similar age and interest group, who would make ideal tenants for the other property. Anything you can bring to the new project which has worked with the old one increases your chances of success.

One of the greatest benefits of all has yet to be mentioned, and that is the reputation you should now be building up with the banks or lenders who financed the original investment. Having borrowed money and created one successful project, you will now be able to negotiate better terms with the lenders who will be fighting to help with the next one.

This is not limited to institutional investors, either, as you now have a proven case to show a private investor who is looking for a tax efficient, but still profitable, investment. You can even arrange to locate and manage properties for these investors in exchange for commission, bringing in extra income without risk. This can then be re-invested back into leveraging further properties, helping you to build your empire as soundly as possible.

Refinancing a Real Estate Rental Property for Even more Profits

Refinancing real estate rental property is something which can be of great benefit, if you know how to carry it out safely. Of course, nothing in finance is ever truly free, and there are fees which the lender will impose upon you. These need to be factored into any projection you make as to whether refinancing will be a good idea. This is assuming, of course, that the goal of your refinancing project is to raise more money for investing in other properties. It certainly does not need to be. There have been many property investors who would simply take this money and spend it, counting it as a tax-free reward for their effort.

If you have any ambition to build up a property portfolio which can keep giving you money for many years to come, it is best not to weaken it by taking money out in this way at the start. Refinancing for re-investment makes a lot more sense, and it should still be possible to gain a positive cash flow. It is also possible to refinance a property, and then use the proceeds to diversify and invest into other things such as stocks or bonds.

A lot depends on your personality. If you are definitely a hands-on person, with a liking for having control over the important investments in your life, you will probably want to stick with property. You control most of the variables here, and operate in an imperfect market. If something is not working, you can change it. When you invest in other financial instruments, you are extremely limited as to what you can do. If the price does not move, you can do nothing to make it move. You can develop some degree of control with disciplined trading, and by knowing how best to react in certain circumstances. The point is, though, that react is all you will be able to do.

Assuming you choose to refinance for further real estate growth, you have immediately reduced one of the biggest risks inherent in this type of investing. When you only have a limited number of properties, especially if you only have one, you are at the mercy of a sudden departure of your tenant reducing your income to zero. Diversification brings a far greater degree of safety. It does make sense to diversify with another property of a very similar type, though, so you can use the insights and knowledge you have gained from managing the first property to good effect.

Speed is crucial for refinancing to work well. You should ideally have a portfolio of properties ready to go when the money comes through, so that you can get it reinvested into property as quickly as possible. It is also a very good idea to advertise for tenants in advance, so that you can start seeing a return on your refinancing immediately. You do not want to be making the increased payments on your new financing package any longer than you need to without income coming in to cover it, and ideally not even once. If you can quickly get the rent in to cover it, refinancing could prove to be a very profitable way to go.

How To Find And Hire Staff For Your Real Estate Rental Business

So you’ve been through the numbers and found a great real estate rental property that you’re proud of. Congratulations are in order for you but the most crucial still lays ahead.

Management of your property is just as important as the purchase of your rental property. Do not sway from this point of contention because you need to have the energy and market savvy to insure that your investment will pay off.

If you intend to make real estate a business then you must treat it as a business. I know you’ve heard that before but no matter what type of business you have you will need a support group.

This support group can make you or break you if you don’t select the right people. A good support group can identify problems and get them fixed right away. A less than acceptable support group can make your life miserable as well for your tenants.

The first step in hiring staff for your business is to advertise. Putting an ad in the paper will give you outstanding results. There are plenty of people each and every day scouring the ads for something that they can do to make money.

Getting these ads in the right type magazines is also important because like minded people for the most part will be reading for these opportunities.

Let’s take a back step at this point to make sure that you need to know what you’re looking for in a staff support person. Congeniality, common sense and being personable are just a few of the personality traits that you must be looking for.

The customer service support team that you select will reflect you. You need to feel comfortable with the person that you will depend on for your real estate business.

Taking your time in hiring a customer service person is the first criteria because you don’t want to pick a person that isn’t out for the good of your company.

This is a time for reference checking to see what type of person is being interviewed. You need to do just as an extensive background check for your future employee as you did with your tenants. Without a proper background check you really don’t know what type of
person they are.

Laying down the requirements of the job like punctuality and good time keeping skills is a must. You must be able to rely on this person for all the paperwork and phone calls that may come in once you start your business.

This person is someone that will come in contact with many of your possible ventures that you encounter throughout your business life.

Making sure that you select the right person for the job will cement in the future for you. You will be able to start making a lot of deals knowing that you have a person that will complement you with a customer service support that is second to none.

You do right by that person and they will do right for you.

Higher Level Business, Higher Level Rentals

It’s time for a business evaluation. This is absolutely key if you want to be able to reach the next level with your real estate investment. You can’t rest, thinking that your profits will increase. You need to evaluate and improve all the time.

The first thing you need to examine is whether or not you are really in profit. Perhaps, despite your projections, you are just barely covering your expenses. Are there expenses you weren’t expecting?

The savviest business people examine their books all the time. You need to look for errors and discrepancies. Doing so can also motivate you to do better. You’ll know exactly where you stand and where you need or want to go from here.

Consider what you can do differently to put yourself even more in the black. For example, if you are making enough of a profit, you can hire a property manager or a team of people to help you. That gives you more free time to expand your empire. The more hands-off profit you have, the better! You’ll never reach this point, however, if you don’t take the time.

How much money is actually going to the bank? In some cases, you might feel like you’re putting it all back into the property. This can be okay, as long as its a trend that doesn’t continue. You’ll constantly want to make your property better, but you have to find the balance.

Some property owners find themselves becoming stingy. They don’t want to take any of their profits to put back into the building. This is also a wrong way to think. You can’t expand your business if you hoard all of your money and refuse to improve things. Remember — you have to keep your tenants happy. That means staying on top of their complaints, making the property better, and fixing things that need to be repaired as soon as possible.

There is no faster way to put yourself out of business and in the hole than by letting your building go to pot. Fix even the smallest things as soon as they are noticed. This can actually save you money in the long run! Problems become even bigger, more expensive problems the more they are left alone. Fixing things right away can mean easier, cheaper repairs.

All of this is mentioned as part of what you need to be doing to evaluate and become a higher level business owner. Those with a greedy mindset are doomed to failure. Those who have faith in their property and make it the best it can be are more likely to succeed.

Your real estate investment property is a business for you. You need to nurture it and evaluate it all the time to take things to the next level. You can create more passive income over time by hiring a team to stay on top of any needed repairs or improvements. Taking care of things right away is a key part of this business, and it will help you to expand your empire.