If you’ve looked around the housing market recently, especially within the last year or so, you may have noticed that property values are much higher than in recent years. As such, the price of rent has also increased, and while this is a burden for many, if you own a rental property, you’re probably not complaining.
The fact is, the housing market has been ramping up to be a seller’s market for some time. And now, with the country in economic recovery due to the COVID-19 pandemic, it’s prime time for sellers to put their homes on the market.
It’s also a great time to be in the property rental business, especially if you live in tourist attraction locations. For example, if you live in Las Vegas, you not only want to invest in a rental property in that area, but you would also want to invest in an experienced Las Vegas property management company as well, to assist you in running your property efficiently.
But this investment is also something you don’t want to jump into blindly, as it is quite a large business venture. No matter where you invest, you need to be aware of a few key indicators of how your property is valued.
Navigating the legal jargon surrounding a home loan contract can be confusing enough without the right set of eyes looking over your document. But add the COVID-19 pandemic into the mix with the eviction moratorium, and it becomes even more confusing.
The federal government issued an eviction moratorium during the onset of the pandemic in 2020. But many states imposed their own legislation that made it legal for landlords to evict tenants, despite federal intervention.
Knowing where you stand on eviction rights is your first hurdle as a rental property owner, especially if you have tenants who haven’t paid rent in several months.
Contact your state representatives and research the proper channels before setting an eviction into motion, just to be on the safe side.
Because of the seller’s market, if you check on a listing for a home one day, chances are it will be pending or contingent the next. This is because mortgage rates are also at all time lows, and people are buying houses left and right regardless of if the listing is well above market value.
Due to the seller’s market, many rental property owners are considering selling their investments in hopes of gaining an above average sale price. But the last thing you want to do is to engage in a bidding war.
So, if you’ve been in the real estate game for a while and you’re tired of dealing with the ups and downs of the market, selling now would probably be the wise choice.
Proceed with caution though, because you’re likely to get many offers on the table within days of your listing, and many of these buyers will try to lowball you into a sale if you’re new to the game.
Choosing the Right Tenants
Being a rental property owner, you have to always be thinking about protecting your investment. And this means that you can’t simply rent your home out to your old friend from college who you haven’t seen in years.
Chances are, that old friend might not be the best tenant. As such, credit checks are crucial to determining the type of tenant that you’ll prefer renting your property out to.
Additionally, running a background check is also highly recommended because you never know what a person’s personal history truly is.
For example, that good friend of yours from your freshman Comp II class might have been the life of every frat party you attended. But he could also have managed to get into a lot of trouble along the way, and might be a less than desirable tenant.
Before moving forward with any rental agreements, ensure that your tenant has a clean rental history, low debt to income ratio, and that he or she doesn’t have any warrants out for their arrest.
Homeownership is often a dream come true for most Americans, and owning rental properties is a great way to build wealth. Just be sure to invest wisely, and to keep ahead of current market trends and all of the economic factors that could affect your investment.