It takes a lot of grit to run a successful rental venture, and for the entrepreneurial-minded individual, this is one of the best ways to build long term wealth. Whether you’re looking to broaden your real estate investment portfolio or to make some extra income with rental properties, the attributes of a savvy entrepreneur will make you stand out.
From knowing the right kind of property to buy, to making excellent use of automated systems to keep your rental property running seamlessly, the savvy entrepreneur makes use of practical knowledge and well-defined strategies to keep the business in good shape. How do you run a rental property like a savvy entrepreneur? There has to be a radical change in how you think and carry out tasks.
Ready to learn what specific steps you should take?
1. Make Your Project Scalable.
Sustainable growth over time is seen as impressive, because it shows progress. Successful entrepreneurs understand the importance of scalability in business, and you need to hack into this knowledge in order to run your rental property like a savvy entrepreneur. While growing your rental business, scalability will help you exert less effort to get greater rewards.
For example, if you plan to increase the number of properties you manage from one or two properties to seven properties, you shouldn’t be spending up to seven times more time/effort to manage them, instead your smart plan should be to optimize the processes in a way that managing the seven properties takes about two times of managing the 1st one. This is the true definition of a scalable business.
2. Having a Basic Template Enhances Scalability.
Skeptic about the practicability of a scalable business? Here’s what you need to do: use your first rental property as a sample. It is with the purchase of this property that you learn all you need to about rental properties inclusive of expected rental income, running costs such as monthly mortgage costs and municipal property tax, rental property management costs e.g. maintenance costs. You’re likely to note some mistakes made when purchasing your first rental property.
Now, with the knowledge gleaned from this purchase (taking into account the mistakes made as well), create a workable template for further purchases- one which when repeatedly used, you are assured of excellent management of good rental properties. This way, you can easily scale your rental business.
3. Purchase Properties in High Demand Areas/Use The Best Real Estate Agents.
When banks make calculations for rental properties, the assumption is that out of 12 months in a year, a rental property is only occupied for 10 months. How do you make the most of this rental management calculation as a savvy entrepreneur?
The best way to ensure your property is occupied with tenants throughout the year is to buy a property in a super high demand area; this way your investment return can be amazingly high. However, if you’re unable to secure a property in the best areas, choose a good area but you have to work with the guidance of a professional rental real estate agent, to whom you’d likely pay a month’s rent as a fee.
4. Short Term Contracts are Encouraged.
Short term contracts are regularly frowned upon in the world of real estate investment, as these contracts are seen as mistakes. However, to maximize your profitability from rental properties, short term contracts come highly recommended. For example, when your property is rented out either room by room (e.g to student) or over a short timeframe (e.g. running Airbnb business), you gain significant financial margins than with longer term rental contracts. While there is higher stress involved with short contracts, stress isn’t something an entrepreneur is scared to deal with!
5. Make Room for Expansion of Your Rental Property Business.
Sitting on your oars after building a profitable business isn’t allowed in the world of savvy entrepreneurs. Now that you understand how to scale and build a rental service from the ground up, this is the time to consider the purchase of similar property types especially within the same neighborhood – as you now have insider knowledge on costs and profits of investing in that environment. This makes your next purchase significantly easier to close.
Real estate investors should be interested in knowing more than how to sell a property for the highest price after the purchase, as there are other areas that bring in more profits. With traits such as consistency, flexibility and a ‘die-hard’ entrepreneurial spirit, running a rental property business is an investment opportunity for the creative and energetic mind to make an indelible mark. Ready to get started on this journey.