In Part 2 of how to get started in Baton Rouge Property Investing, I want to explore some areas of concern that my clients frequently mention. Just remember that investing in rental property is not for everyone and it may not be right depending on your current circumstances.
What if I can’t rent the house or it is vacant too long? Having reserves of at least three months’ worth of expenses will definitely help with those times the house is vacant. With proper planning you should be able to acquire houses that can be rented without too much difficulty.
How can I make sure I won’t choose the wrong tenant? There are no certainties but you can take steps to increase your odds of finding a good tenant. One way is to have a formal screening process in place. Many property owners have had success using credit reports, payment histories and background checks. There is also no substitute for spending some time with prospective tenants and getting to know them before you make a decision.
How can I lessen the likelihood of unexpected repairs and expenses? There are a number of strategies that can be used to handle this problem. The first is to have a professional property inspection, second is a home warranty and third you will probably want to implement a preventive maintenance checklist to catch problems before they get bigger, and more expensive.
Will I receive calls from tenants at all hours for repairs? There’s just no way around this, some repairs can be emergencies and you will have to react quickly. For routine maintenance items, consider having tenants email you.
How do I select a property to buy? This is where the expertise of a Realtor comes in. I have a multi-point list of criteria that I use to select properties as well as a handful of financial calculators and spreadsheets I use for the benefits of my clients.
How do I know my investment won’t lose value? You don’t, real estate investing is not a sure thing but it is the IDEAL investment.
I – Income – the property generates income while it is rented
D- Depreciation – this is a complicated tax issue, see your tax professional
E – Equity build up – paying a monthly mortgage adds to your equity
A – Appreciation – most of the time, real estate increases in value
L- Leverage – this is a way to increase your buying power by borrowing funds
If you are interested in becoming a real estate investor in the Baton Rouge area please contact me, I can help.