Are you a landlord or looking to buy any homes for sale in Farmington Hills MI or anywhere else? Here are several suggestions for real estate investors either with or considering buying rental property that will increase your chances of making and keeping a profit with your investment property. 1. Manage your repair costs. Managing your repair costs means estimating your repairs before you purchase an investment property, but it also means that you need to know how much things should cost. Otherwise, it is easy to lose sight of how much things are really costing you. Plus, it's a great idea to pad your estimate amount, because most of the time, more repairs are needed once the repair work begins. It just could not be seen until it things were physically uncovered. You want to make sure that you have enough money to cover these unexpected costs. If you do not, your property could easily turn into a cost drain instead of a profit generator.
2. Research fair rent values. Besides the repair costs, the most common mistake people make is assuming that they will get more for rent than the market demands. You can always charge as much as you want, but you probably will not be able to find a willing tenant very easily. Even if you do, once the tenant realized that they are being overcharged, do you think they might not begin to look at other places? How well do you think they will respect your property once they see you charged them more then their neighbors pay? You want your investment property to be able to make money by charging the fair rent value. Make sure you know what this is before you buy your home. If the numbers do not allow you to make a profit, don't buy the property. You do not want to learn this after you already bought your property.
3. Do not keep galvanized pipes. Galvinized pipes are old. They probably need serious plumbing, anyway. Just assume that you need to replace it. Use PVC or PEX. Decide to do this before you buy your investment property. If you cannot make a profit by replacing these old pipes, it probably is not a good idea to buy the property. One benefit to switching out the pipes is that you can advertise "new plumbing." The real advantage is that you are a lot more likely to avoid the dreaded call in the middle of the night about a plumbing emergency. 4. Buy basic cabinets. If you are renting your property, do not buy the most expensive cabinets. Tenants often are rough with these, anyway. You can buy the basic cabinets from Home Depot or Lowe's, and you get get a really nice stain for them. They will look really nice, and you will keep down your cost. If you plan to sell the property, then you can get the higher quality cabinets.
However, if you are renting, buy the base cabinet. You will not be able to get more rent just from having nicer cabinets. 5. Paint the inside your home with more than one color. 6. Do not use carpet. Carpets get dirty too easily. Therefore, you should not install carpet when you are looking to rent your property. Even though you professionally clean carpet, the color will eventually fade. Hardwood floors need less maintenance and are more durable. 7. Do not provide appliances. Even if a potential renter asks whether you supply appliances, do not cave and provide them. If you provide appliances for the tenants and they break, the will expect you to fix or replace them. If you buy a house where the previous owner left their appliances, just tell the renters that they can keep them. Make sure they know that you will not replace them if they break.
8. Get the Section 8 Inspector to visit during your repairs. Most investors want to see as little of the inspector as possible, but it is a lot easier to modify your repairs while you still repairing than after you already completed everything. In the worst cases, the inspector requires the investor to tear apart walls after all of the repairs were already done. Another benefit to bringing in the inspector during the repairs is that the Section 8 inspector will more likely work with you instead of against you. That is not a guarantee, but it should improve your chances. 9. Select your tenant carefully but consistently. You want to make sure that you get the right tenant in your property, but you also need to make sure that you are being fair. Not only is it the right thing to do, but it also is smart, too. It is easy to get charmed by the nice people who are having a hard time and just need a place to live. Some of these people really are nice, but many of these people are professional tenants, who will only pay you the first two or three months but stop paying later. You want to have a methodical approach that forces you to objectively pick people. Plus, you do not want to have to fight a discrimination lawsuit, either. Examples of objective criteria might be having to pass a criminal background check without it showing any violent or drug crime activity. You might require a certain credit history via a credit check. Income requirements are a good idea, too.
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