Kissimmee's population has been on the rise since 2019, growing at a rate of between 2.99% and 4.55% per year. More people translates to more potential tenants for investment properties, which is good news for wannabee landlords.
If you're considering taking the plunge into real estate investing, there are a few things you need to know first.
This first-time landlord checklist will help you navigate the intricacies of buying and owning rental properties.
A First-Time Landlord Checklist of Pros and Cons
Before you start shopping for potential investment properties, you must understand what you're getting yourself into. These are the pros of investing in rental properties:
- Potential to earn passive income
- Appreciating property values
- Tax perks on expenses
- Ability to leverage the property for finance
Some drawbacks to investing in rental properties include:
- Possible legal issues if you fall foul of landlord-tenant laws
- Potential periods of vacancies
- Possibility of having to deal with evictions
- Extensive time commitments
Fortunately, hiring a property management service is one way to avoid most of these negative aspects.
Only Consider Properties in Prime Locations
As a first-time landlord, it's easy to overlook the importance of location when choosing an investment property.
Location is a vital component of a successful rental. Research your options thoroughly, keeping the following in mind:
- The walkability of the neighborhood
- Local schools
- Public transportation in the area
- Green spaces and recreational spaces
- Amenities like shops and hospitals.
All the above are things that potential tenants will consider when they're deciding where to stay. From another perspective, you should research the employment rate in the area as well as the location of any large companies nearby.
Employment opportunities will attract more people to the area in search of rentals.
Calculate Your Cash Flow
Avoid properties that will end up costing you money every month. Your property must generate a positive cash flow. Get an expert to help you with income and expense projections for your rental home.
When you apply for a mortgage on an investment property, the lender will require an income property appraisal. This helps them estimate future rental income.
Most lenders will subtract 25% to account for vacancies, so use this as a rule of thumb when calculating your potential earnings.
Prepare for the Worst
In a growing city like Kissimmee, you have a slim chance of failing in the rental market, especially if you work with a property manager.
However, never assume you'll earn a substantial rental income from day one. You must put some cash aside to account for vacancies, unexpected repairs, late rental payments, potential legal issues, and regular property maintenance.
Getting the Most Out of Your Investment Properties
One last thing to add to your first-time landlord checklist is hiring a property manager to help you manage your properties most effectively.
A rental property management firm will perform a rental analysis to ensure you profit from your investment, screen tenants, and manage all the day-to-day tasks associated with rental real estate.
Get in touch today to discuss your Kissimmee property management needs.