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.

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.

Build a Team to Take Your Business to the Next Level

As you grow, you might find that it is necessary to build a team to stand by you throughout the process. This team will work with you to find property, get financing, find tenants, work with those tenants, and take care of any legal issues you might run into. A good team is invaluable!

While you might have been doing most things yourself to this point, it can be really hard to scale up if you’re not working with others. The first person you might want on your team is a good realtor. They can help you find new properties that have the potential to be a rental investment.

You can also get a team of people who will help you get things taken care of, such as financing. Your hope is probably that you’ll find a reliable company that can score you reasonable financing once you have proven yourself time and time again.

Where your own specific team might really come in handy is when it comes time to get the unit ready and to advertise for tenants. They might hire different companies or independent contractors to get these things done for you.

You can also have people in your office staff. They can help you advertise for new tenants. They can also help you screen prospective tenants by running a background check and so on. Basically, they can do the legwork it takes to fill those vacancies! When you are making enough money, having these people on your team is more than worth it.

Having an office staff can also be useful for when tenants need to call to report any maintenance issues. Your staff can handle passing the job along to the appropriate person and filing the work order.

It is especially important to have a team by your side if you find that you are overwhelmed trying to handle everything yourself. Perhaps you no longer want to receive early morning phone calls about maintenance issues! Having a team take the calls for you can take a lot of stress away.

You might notice that a lot of the things a good team can do for you are the same things a property management company can do for you. Depending on your situation, you may find that having your own team is less expensive than having a property management company. It is also a lot more flexible and more in tune with your business when you have your own team by your side.

Never be afraid to put the right people by you in order to get things done the right way. This is your business, and you need to treat it as such. Whether you hire people as employees or hire independent contractors, this is the next step in expanding your business so it is even more profitable than you ever imagined it could be. There’s nothing better than having things be more hands off and making more money at the same time because you are able to scale up!

Finding the Right Team to Help you Along the Way

It has become fashionable in recent times to think in terms of very limited hour work weeks, and the concept of outsourcing virtually all of your business life so that you can make the profits without doing much of the work. Everything which this concept involves is possible at least to some degree, and real estate is one area where it is definitely possible. There are specialist management companies who can take on the role of administering your rental properties and income, allowing you all of the free time you need for the other projects in your life.

The entire idea of outsourcing your whole business life does have its limits, and one inherent weakness. That is simply that you cannot outsource or duplicate yourself. Even though you may reach the stage where all of your routine work is handled by other people, someone has to oversee the operation. The idea is that you appoint a manager to oversee it, but who oversees the manager? Adding a manager at this level also definitely means an extra expense, and a significant one at that. In the end, you have to take on some kind of supervisory role, or else your business is totally at the mercy of other people.

In the world of real estate, everything is so much simpler. The business lends itself perfectly to outside management, because of the great similarity of one project to the next. Although there is obviously going to be a significant fee to be paid for this management, it really can save you money as well. Even an innocent mistake, such as forgetting to clear trash cans away, can negatively affect the impression which prospective tenants receive, which can in turn cost you money. Of course, management companies are not infallible, but they are highly trained and will make fewer mistakes than you, as a rookie manager, could expect to make.

There are some management companies who are so confident in what they can do that they even say they will only charge you when the property actually has a paying tenant. This is the type of promise you cannot make unless you are totally confident in your own ability, and this instils huge confidence into property owners. The management company will want its fee, of course, but if they are going to allow you to concentrate on sourcing more properties and developing them this will be paid off many times over.

As the right management team can take your business to a completely new level, it is worth taking the time to make sure that you find the best one possible. Use local Internet search and local media to find as many possibilities as you can, get referrals if you know anyone who has used any of these sources. Make sure you know in advance what the charges are, and that there are no hidden clauses which could be applied. It is worth consulting a lawyer here, because if you can get the right management company, it will be worth their weight in gold to you.