“Guide On How To Start A Rental Property Business” written by Mike Marko
How to start a rental property business? That’s simple! You just need to buy or build an empty building and let people rent it.
That’s it, right?
Well, I hate to break it to you but it’s not that easy. It’s more complicated than you think.
So how to start a rental property business? A rental property business is quite difficult to establish. It takes a lot of paperwork and you also have to adhere to the rental laws in your area.
You need to be meticulous in your every move because a single mistake could cost you a lot.
Pretty scary right? Don’t worry, I’m not here to discourage you. In fact, I’ll tell you the things that you need to know about how to start a rental property business.
In this blog post, I’ll talk about how to start a rental property business. This will give you an idea of how to set yours up in a way that’s likely to get you profits in the future.
Easy Steps on How to Start a Rental Property Business
Just like any business, there’s a proper way on how to start a rental property business. You can’t just look for tenants and ask them if they want to rent your property. You could face lots of legal consequences for doing this.
It’s illegal to operate without the right permit and licenses. The documents you need to operate depends on your local laws.
With that said, the first thing you need to do to start a rental property business is to give yourself a background on what you’re getting into.
Give Yourself a Background
The first step on how to start a rental property business is by giving you a background.
Give yourself a background on rental properties and how they work. This is the best way to know how to start a rental property business.
Note that you need to study this before you even start looking for tenants. Do it by getting as much information as possible on how to rent property. Talk to people who’re already doing it and consult advisors like landlord-tenant lawyers.
You should also determine where to get your funds for the following:
- Promotion of your rental business.
- Hiring employees.
- Maintaining the property.
Most property owners finance their rental property business by getting a loan. But if you have enough savings, you can use your own money as well. Just be wary of the risks of using your own money because it can leave you empty handed.
You can know a lot of information by studying your rivals. See how they attract tenants and improve their services.
Get Help from Professionals
The second step on how to start a rental property business is by getting help from professionals.
It’s vital to get help from professionals like real estate agents, rental lawyers, or property managers. They can help you understand how to start a rental property business.
Also, you definitely need to get assistance from professionals like rental lawyers. That’s because there are certain building codes and laws in your area.
Every rental property is required to follow the policies issued by the government. Failing to follow the laws in your area can affect the image or reputation of your rental business.
You’re going to have a hard time having tenants if you’re not following building codes and rental laws.
That’s just one part of the problem. You could face litigation or legal penalties if you’re violating laws.
Apart from that, professionals can also help you achieve success. You can get ideas from them to improve your rental property. Doing this ensures you that you’ll get the best return on investment from it.
Also, they can give you advice about your business plan. Rivalry among rental businesses is tough. This is the case especially if you have a commercial property.
You need to have the best business plan because that’s how to start a rental property business properly. Also, don’t forget to offer the best amenities to get the attention of commercial tenants.
Hire a Property Manager
Studying how to start a rental property business takes time. So if you want to earn money from your properties right away, then you should hire a property manager.
A property manager can help you understand how to start a rental property business because they know the do’s and don’ts of a rental business. They can manage and run yours on your behalf.
Running a rental business is more than just collecting rent. You need to do tasks such as:
- Advertising the vacancies.
- Choosing the right tenants.
- Attending to the tenants’ needs.
Aside from that, you also need to maintain the property and improve its value.
It’s impossible to do all those tasks if you’re just a beginner. But fortunately, the property manager can take care of all of them in your stead. If they’re experienced property managers, they can also do it without violating rental laws.
Also, they can’t only teach you how to start a rental property business. They also have enough experience to secure the success of your rental business. The property managers ensure that your operations will go as planned. They will keep everything in order such as handling vacancies, turnovers, or disputes.
In addition to that, the property manager will also check if the utilities and systems in your rental property business are working properly.
Register Your Rental Property Business
Registering your rental business is one of the most important steps on how to start a rental property business.
You need to register your rental business before you start advertising it. With that said, list your rental business on the right government agency. This will make it legal.
Also, make sure that you talk to the relevant authorities about getting a license for your business. This is an important part of how to start a rental property business.
You need to have several licenses before you can operate a rental property business legally. Usually, you need to get the following:
- The Certificate of Occupancy – This is proof that your rental property is following the safety building codes in your area.
- Housing Business License – You can get this license after getting the Certificate of Occupancy. This license is needed to inform your local government what you’re doing.
You may have problems if your rental business doesn’t have an official business status. One of the problems that you’ll have is finding tenants.
Most tenants only choose a rental business that follows rental laws. That’s because operating legally makes the tenants feel safe in your property.
Make a Business Plan
You also need to have a business plan. The business plan will ensure that your property will be profitable.
Make sure to address the following in your business plan:
- How you can set your properties apart from competitors. Outline your plans for the next 5 years.
- List your expectations. Think of your projected rental income and planned improvements.
- Prepare management techniques and expansion strategies.
- Outline your marketing and advertising plans. This will help you avoid having vacancies.
Apart from that, also make an online marketing strategy. Think of how you’re going to use social media for your business.
You can even find your next tenant on social media platforms even without spending a dime. You just need to promote it using content such as pictures, videos, or blog posts.
Advertise Your Property Effectively
If you don’t know how to start a rental property business, make sure that you know at least how to advertise it.
The startup phase can determine the success of your rental business. Having said that, make sure to advertise the first vacancies in your property effectively.
Create an advertisement that contains all of the important information about your property. Include its address or its building classification. Indicate if it’s a commercial or residential rental property.
Also, don’t forget to include the amount of rent. Set the right amount of rent for your rental business. The right rent amount is between 0.8% and 1.1% of your property’s value.
You can also check the rent of your competitors. This will give you an idea of how much you can charge in your rental properties.
Lastly, make sure to advertise your property to the right type of tenants. Always determine your target tenant before you open your rental business.
For example, if you’re renting out a residential property near a school, your target tenant is probably someone with a family and children.
Choose the Right Tenants
Most blog posts about how to start a rental property business will include this.
Choosing the right tenants is another important aspect of how to start a rental property business. You should pick tenants carefully. Having the right tenants can contribute to the growth of your business.
Good tenants always pay their rent on time and in full. Also, they take care of the rented property as if it’s their own.
You can have a steady revenue if your tenants are taking care of the premises. This reduces your expenses for repair and maintenance.
How to start a rental property business? You must also know how to filter out bad tenants.
As much as possible, you must avoid bad tenants because they can cause problems. Usually, bad tenants have lots of complaints and don’t take care of their rented property.
With that being said, consider using a tenant screening process. If you don’t have experience doing this, you can do it with a tenant screening company. Tenant screening companies can help you choose the right tenants by conducting a background and credit check.
The best tenants have good credit and rental histories. This assures you that the tenant can pay rent on time. Also, a good rental history shows that the tenant can take care of your rental property.
While you’re studying how to start a rental property business, make sure to find info about tenant screening companies. They can help you find the best tenants for your rental properties.
Hire a Maintenance Management Company
Lastly, you should also hire a maintenance management company. This is important because they can help in preserving the condition of your rental buildings.
Also, the maintenance management company can keep the utilities in your buildings working.
This is important because every rental property business should have working utilities. Rental properties without working utilities attract fewer tenants and have higher tenant turnover rates.
Final Thoughts on How to Start a Rental Property Business
In this blog post, I talked about how to start a rental property business.
How to start a rental property business? The first thing to do is to give yourself a background about rental property business. This will help you visualize how you can properly manage your rental property business.
Once you have a background, make sure to hire professionals to help you set up your rental business. They can help you register your business, make a business plan, and advertise it.
That’s important especially if you don’t know how to start a rental property business.
Also, make sure to hire a property manager and maintenance company. They can teach you a lot of things about how to start a rental property business. Also, they can help you manage your rental business properly. Property managers have experience in handling tenant related issues, adhering to rental laws, and they know how to make more money with your rental properties.
The maintenance management company, on the other hand, can help in maintaining physical aspects of your property including its utilities.
If you have more questions about how to start a rental property business, leave them in the comments below.
If you need help marketing your business online then check out IM Consultant Services.
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