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Getting Started With Your First Rental Property was originally published to MPG Deals Ready to start you rental portfolio? Have you done enough research to know what you are doing so that your first investment property is a winner? In our article "Should You Start With Fix And Flips Or Buy And Holds?" we covered the fact that you should start with fix and flips and build some cash before jumping into rentals. Here are a few tips to make sure that your first rental property turns into a good cash flow property and not a nightmare that bleeds you dry. Rental properties are a great way to add some additional cash flow every month, as well as creating generational wealth for your children and grand children. However there are a few things that you MUST do to make sure that you are making a good investment. Not every property is a good candidate for becoming a rental property. Run The Numbers On The PropertyThis by far is probably the most important aspect. You must take into consideration how much you are paying for the property, what the note is (if you're not paying cash) and how much you can rent the property for. You also have to calculate in things like insurance and HOA dues. Kayleigh Kulp had a bit to say about this back in August:
Besides making sure that your property is in a decent neighborhood and that you will be able to rent it, running the numbers is the most important thing. In a later article we will dive more into calculating cap rate (capitalization rate). Rental AmenitiesSo the numbers work on the property, now onto renting the property. One mistake that some first time land lords do is over update or flat out just make to many improvements to the property for tenants. In fact there are some things that you really shouldn't have at a rental property. Chris Deziel wrote about a few things that you definitely don't want at your rental property:
Those are 4 things you really don't want at your property! First, the garbage disposal - tenants may tend to use this for a garbage can! And if your property is on a septic tank, you are probably going to end up pumping it sooner than if you didn't have a garbage disposal. Trampolines -really? You are just asking for a law suit when a tenants child or one of their friends bounces off and breaks one of their legs in multiple places. Swing sets - this is one that we sometimes let slide depending on the building materials and how well it's anchored. Metal swing sets we always remove. However if it's a nice pressure treated swing set that has a little fort and so on we may leave. Lastly a pool. Whenever we consider purchasing a property for rental OR fix and flip and it has an in ground pool, the first thing we ask ourselves is "where are we going to get enough dirt to fill that in?". Pools are extremely dangerous for small children! The risk of a child drowning is too great, much less the possible law suits. Summing It Up As we stated earlier, a rental can add some great cash flow to your monthly income. However you have to run the numbers and make sure that it's going to cash flow. And lastly, be careful about what amenities you provide or leave on the property when renting it. Lastly, be sure and check us out for investment properties for sale in Atlanta GA!
via Blogger Getting Started With Your First Rental Property
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