While it’s true that anyone can become a landlord, not everyone can be a successful real estate investor. There are plenty of people out there who throw a “For Rent” sign on a property that they own and hope to make some money from it. However, if you want to make good money from the Detroit real estate market, it’s important that you know how to navigate the waters of real estate investing.
The real estate market has been in a state of flux for some time, which makes it a great time to get into the world of owning Detroit rental properties. Keeping these tips in mind can help you achieve maximum success as a landlord.
Become Familiar with the Law
It’s crucial that you understand the laws that legislate everything you do as a landlord. In addition to laws put into place by the state of Michigan, there are federal laws in place, including the Fair Housing Act, that will dictate everything you do. It doesn’t matter how good you are at managing numbers if you violate any of the laws that govern rental properties. For instance, the Fair Housing Act makes it illegal to discriminate against a potential renter based on familial status, religion, and several other factors. In addition to researching these laws for yourself, it’s a good idea to employ the services of a Detroit real estate attorney who can help you draw up the lease that you’ll eventually use and the rental application that you’ll ask potential renters to fill out. Ensuring that everything is done in compliance with state and federal laws not only protects you from potential fines but also ensures that you develop a good reputation as a landlord. In the world of Detroit real estate investing, your reputation is everything.
Treat Your Rental Property Like a Business
Maybe you became a landlord by inheriting a property, or maybe you bought a second home with the intention of flipping it for profit or using it as a rental property. However you came to be a landlord, it’s important that you treat it like a business. Anything that you do that involves making money is a business. Your role as a landlord involves an ongoing investment of time and money. In addition to the record-keeping involved with collecting rent, paying for maintenance, and more, this means that you also need to maintain professional relationships with your renters. Treat every conversation with one of your tenants like a business conversation, treating them more like clients. Additionally, if you’re just getting into the Detroit rental market, sit down and write out a business plan. This business plan will serve as your roadmap, and could eventually lead to you adding more rental properties to your portfolio.
Know Your Potential Renter
The Detroit rental market is incredibly diverse and varies from one neighborhood to the next. Knowing your renter market is a crucial part of achieving success. Spend some time researching the demographics of the area that your property is in and allow this information to help you make the decisions. As we’ve already discussed, you can’t do anything that violates the law. However, you also don’t want to price yourself out of the market. If you own a rental property in a low-income neighborhood, you don’t want to charge extremely high rent. A house that sits vacant costs you money every month that it remains unoccupied. Understanding the financial positioning of your potential renters allows you to set your rental price accordingly.
Setting the Right Price
As we just alluded to, it’s important that you know how to set your monthly rental price. For instance, if you’re renting out a two-bedroom, one-bathroom home in an area where similar properties cost $1,200 per month, you don’t want to try to charge $1,800 for rent. Doing so will simply push potential renters toward those other properties, leaving you with an empty property. Conversely, if homes that are comparable to your rental property are being rented for $1,800 per month, you don’t want to only charge $1,200 each month. In a year, that would lead to you losing a potential $7,200. Know how to set your rental price in order to keep your property occupied without leaving money on the table.
Screen Your Tenants
The state of Michigan requires you to have written consent before running credit checks and accessing other private information. With that in mind, it’s a good idea to include a written consent form with your rental application. Once you’re ready to put someone in your rental property, you need to know who you’re working with. Spend some time speaking to an applicant’s employer, past landlords, and more. The more that you know about the people who want to rent your property, the less likely you are to run into problems in the future.
Decide How Committed You Want to Be
Rental properties have the potential to generate passive income. However, you can save some money by being more actively involved in managing your property. Hiring a property management company in Detroit allows you to not be as involved in the regular maintenance and management aspects of your property. However, if you’re a handy person who knows how to tackle a lot of tasks on your own, or you have the free time that’s required to collect rent and manage your property, you may want to handle it yourself. One of the best parts about being a landlord is that you get to decide how involved you want to be.
Upside Investments can help you with your Detroit rental property business. Whether you’re just getting into the world of real estate investing or you want to expand your portfolio, we have the services that you’re looking for. Our team of industry experts not only knows the Detroit real estate market, but we also have the services that can help you take your business to the next level. Contact us today to find out more about how we can help you make your real estate investment dreams a reality.
