Top Tips for Passive Investing in Single-Family Rental Properties

Posted by Chris Clothier on Thu, Sep 28, 2017

realestateinvestment-singlefamilyproperties.jpgWe’ve all heard at some time or another that real estate is a great investment. It’s true—investing in real estate can be your key to financial freedom and the retirement of your dreams. Unfortunately, a lot of people make the mistake of conflating “great investment” with “easy investment.”

While investing in real estate can be one of the most profitable ways to invest (if approached with the right strategy), it does demand time, attention, and expertise.


For investors looking to profit from single-family rental properties, there’s a lot more to it than buying cheap houses and renting them to poor college students.


No, if you want to be truly successful as an investor in single-family rental properties, take our advice:


6 Pieces of Expert Advice on Single-Family Rental Properties

 

Get the Right Location

In real estate, we all know that location matters. For real estate investors, the factors that determine a good location is a lot different than that of your average homebuyer. While a secluded home in the country may be idyllic to a homebuyer, it’s not likely to attract many tenants. Real estate investors aren’t just looking for the right properties, they’re looking for the right places.

It’s about zeroing in on up-and-coming neighborhoods and finding the places that have easy access to grocery stores, business and shopping districts, schools, and other amenities. It’s about vetting areas for low crime and population growth.

Getting the location right takes careful research not only for the now but in studying the trends of the past and looking ahead to the future. It takes a keen eye and expertise to do well!


Do Your Homework

Speaking of research...if you want to be successful investing in single-family homes, you’ve got to do your homework beforehand. You can think of it like a big funnel that narrows down to individual properties that you are interested in making offers on. At the top, you have the general market that you want to invest in, like Memphis. You need to know about that market on a broad scale. What are general economic trends like in the city? Where is real estate heading? How is population growing? Learn all that you can about your market as a whole. Then you zoom in more. You start seeing neighborhoods and communities that interest you as investment opportunities. You learn about them: the cost of properties there, the average rental prices in the area, the local amenities and crime rates. The picture begins to focus.


From neighborhoods, you zoom in on streets and neighbors and individual properties. You research those properties and learn their history, too. There’s a lot that can go into purchasing a property.

It gets easier when you already know your market, but cultivating that knowledge takes time.

 

Run the Numbers

In real estate investment, there are a lot of variables. Sometimes it’s hard to know if you’re making the right decisions for your financial future. It can all seem uncertain when you don’t know if you’re picking the right properties or the right markets. When it comes to investing in single-family properties, you can rest easy in this: you can always trust the numbers.

Unlike gut feelings and even logical rationale, the numbers always speak for themselves. At the end of the day, you always ask yourself whether or not a deal makes financial sense. Will this property yield the positive cash flow to make it worth it? How much wiggle room is there?


Don’t Do it Yourself

One of the biggest mistakes new real estate investors make is simply trying to go at this whole thing alone. They decide to step into the role of landlord themselves under the assumption that it will save them money to do so, not realizing that they’ve just signed up for a full-time job. What investors don’t realize when they do this is that they’re not only squashing their ability to invest passively, but they’re severely limiting their potential to scale their investments and grow long-term wealth.

When you’re a one-man team landlording properties, you can only do so much. For real estate investors who want to use their investments to fund a retirement or become financially free, landlording just isn’t an option.


Plan to Scale

Think about your long-term plans. Buying your first rental property is a big step, but it’s hardly the only investment you’ll need to make to find true success. From the very beginning, you need to be thinking about the future and planning to scale. That’s why doing it all yourself just isn’t in the cards!


Bring in the Experts

If you can’t do it alone, who do you turn to? The experts, of course! For a real estate investor looking to invest in single-family rental properties, the best partner you can have is a turnkey real estate provider like Memphis Invest.

With decades of combined experience, we know our markets, neighborhoods, and properties like the back of our hands. We pride ourselves in providing premier services and property management for owners and tenants. We’re not here to sell properties to make a buck—it’s about investing in you and your success as partners.

 

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Topics: single-family rentals