Being successful in rental property investment comes down to one important question. Are you financially prepared? It is common knowledge that the real estate market can be unpredictable, so having a plan that considers the details meticulously and prepares for the unexpected, will save you a lot of time and money in the future.
From our experience working as property managers in Tampa for over 30 years, we recommend asking yourself the following questions to determine if your current financial status can uphold the unpredictable world of property investment.
ARE YOU PREPARED FOR MAJOR REPAIRS?
Purchasing rental property can be a great investment, but it is important to be financially prepared for unexpected challenges along the way. You may face major repairs or renovations that you hadn’t originally budgeted for. So, before you begin your search, determine if you have the capital to maintain a property if something goes wrong.
ARE YOU PREPARED FOR VACANCIES?
Also consider the financial impact if there is a significant gap of time without tenants renting your property. Will you be able to carry the mortgage payments and monthly bills on your own? Having a Tampa property manager can keep gaps without tenants to a minimum, but the market can be highly unpredictable. For many aspects of owning rental property, you must be prepared for unforeseen situations.
HAVE YOU BUDGETED FOR BOTH EXPECTED AND UNEXPECTED EXPENSES?
The mortgage payment is only one aspect of the the expenses. To determine if you are making a sound investment, you must consider the regular monthly bills like garbage, utilities, and insurance, along with the unexpected ones, like a broken water line or electrical repairs. Some of these you may have considered, but others may come as a surprise. For example, what happens if you have are forced to evict a tenant and you must consult with a lawyer? Do you have funds set aside for legal expenses? These are just some of the things that you must budget for. You must also consider annual expenses like accounting services, vacancies, property management, capital improvements, scheduled maintenance, insurance, and many others. Be thorough when itemizing your budget and determine every cost that could come along with owning rental property.
DO YOU HAVE A PROPERTY MANAGER?
Part of being a good entrepreneur and investor is recognizing your strengths. You may be an expert at closing deals and finding great rental properties, but what about other aspects like managing the books or keeping up with repairs. Having the right team in place will save a lot of headache in the future. A property manager in Tampa takes a large part of stress off being a landlord and allows you to focus on future business opportunities. Maximize your strengths and entrust the help of experts for areas where you may not be as savvy.
WHAT’S YOUR EXIT STRATEGY?
Before signing on the dotted line, it is paramount that you have a plan in place if things don’t go as expected. If there is an negative change in the market or you find yourself unable to recoup losses, what will you do? Don’t wait until it happens. Be an intelligent investor and plan for unanticipated situations. Always have the end in mind and determine your long term goals. Do you plan to pay off the mortgage and then sell, do you want to rent indefinitely, are you planning to sell when the market peaks. These are all questions for which you should have an answer prior to investing.
As a team of Tampa property managers that have been in business since 1981, we have been there for our clients through many changes in the real estate market. From our experience, we know you can never be too prepared. Your finances depend on having an appropriate plan in place. So, take the time to sit down and evaluate your financial objectives and determine how varying situations to the property or market may affect the outcome of your investment goals.
For information, please call us at (813) 968-5665, or submit our proposal request form.