by Michael Peterson

Editors Note: We have been so busy updating ProAPOD Real Estate Investment Software that we are happy to post rental property articles by other authors that we consider beneficial to our readers who are wanting to learn about real estate investing..

Only 30% of Americans rent, which makes the rental market a specialized market with a variety of niches. If you want your suite, apartment or house to rent quickly and stay rented, the first step is understanding this market. Quite simply, a well-targeted unit will bring in more rental applications and stay rented longer because it gives people what they need. Even in a housing market that has a low vacancy rate, attracting good tenants is always a good idea.

Finding the balance between who the renters are and who you want to rent to will determine a number of things. Once you know the tenant you’re attracting, you can evaluate whether or not your suite has what they’ll be looking for. Should you upgrade? Divide your rental house into smaller units? Lower the rent? Raise the rent? Don’t skip this step! You can always add features or change your tactics.

WHO ARE THE RENTERS IN YOUR NEIGHBORHOOD?

The following list describes some common tenants and what they typically look for. Use it to get an idea of where to start when choosing the right tenant:

THE SINGLE STUDENT

If you have a small suite in a good location, this renter can be a good bet. Your suite will have to be on a major bus route or close to the school if you want to be in demand though. Your rent will also have to be affordable. Other than this - the single student doesn’t really need much. What they need:

>>Close proximity to college or university (walk or bike) OR Funky location along a major bus route

>>Cheap rent

>>Other bonuses include: internet connection, good cell phone reception, other students or social hub nearby, close to library, walking distance to grocery store, pet friendliness.

The single student doesn’t really ask for much. Often the thrill of living on their own for the first time is enough. Drawback: Though usually stable through the school year (September - May) the student will often pick up stakes and move back home when the school year is over.

Where to advertise: Online, housing boards at colleges and universities, local papers.

THE ROOMMATES (3 or MORE)

Think of this group of renters as a pseudo family because that’s often how they see themselves. Banding together for economy and companionship, the roommates are simply looking for a home. Though they are sometimes students, this group will be looking for more than the single student renter: features like yards, workshops or basements that can be used as common areas are bonuses. What they need:

>>Space (three bedrooms or more plus common areas)

>>Economy: Rent that’s cheaper per person than a one bedroom or bachelor unit

>>Close to bus route or walk to town

>>A house or suite that has a good balance of style, flexibility or urban location. Internet connection and good cell phone reception are bonuses.

If the roommates have a strong leader that you communicate well with, this group can take care of and keep your property rented steadily for years. When the house line-up inevitably changes, the leader will make sure rent still gets paid. Keep an eye out for the groups who are looking for a “home” as opposed to those who are looking to “party.” The former will plant gardens and paint rooms if you let them, the latter will just trash the place.

Where to advertise: Online, local papers, housing boards at colleges and universities, outside the unit, on local bulletin boards.

THE SINGLE-PARENT OR YOUNG FAMILY

The single-parent family or young family can make great tenants. Usually stable, long-term renters that will not trash your house, these people are looking for a safe place for the children that can be afforded on a single income. What they need:

>>Space (two bedrooms or more plus common areas)

>>A yard or close proximity to parks, places to ride bikes, swim, hike etc.

>>Walking distance to schools

>>Rent that can be afforded on a single income

>>Appliances: fridge and stove essential. Unless your suite is next to a Laundromat, a washer dryer or W?D hook up is also essential. Dishwasher is a bonus.

A suburban location that students and young professionals are not usually attracted to will suit these renters. They will often (but not always!) sacrifice style for security, so if your house is in good shape but a bit out of style, consider these tenants.

Places to advertise: online, local papers, supermarket and community bulletin boards, outside the unit, local schools

THE YOUNG PROFESSIONALS

The young professional and the young professional couple can pay a little more, but usually demand a little more as well. Fortunately, more is relative. These tenants don’t have children which gives them great flexibility when it comes to space and location. They don’t need a big property or lots of rooms. They don’t need low rent. Studio spaces suit them fine. Luxury suites are nice. Rooms with views and atmosphere are attractive. Funky character suites are awesome. Rentals that are close to places to spend their money are good also. What they need:

>>Lifestyle through design: stylish living for these tenants is all in the details. Does your unit have high ceilings or a great view? Have you included extra appliances or high-end features? Is there a bidet, Jacuzzi or claw foot tub? Does the refrigerator make ice? These things matter and will allow you to charge a bit more. Do what you can to add beauty to your rental unit if you want to attract this tenant.

>>Lifestyle through location: an urban location is always an easy sell for this tenant. Usually close to work with access to nightlife and shops city dwellers may forgo design features in order to be close to the action.

Lifestyle is the number one criteria for this renter. The good news is that almost any unit can be renovated to attract them and rent can be raised accordingly. But do your homework! The competition here is fierce and includes starter homes and condos, which many in this group are ready to buy. Before you dump all kinds of money into renovations, make sure there aren’t large numbers of “lifestyle” apartments and suites going un rented in your area.

Where to advertise: Online is very effective for this group especially when you include photos; local papers.
About the Author

National Rental Properties is a great place for property managers and property owners to list American rental properties. The site is FREE to use, whether you’re looking for a place to rent or placing an ad online.

Money is the primary reason why people invest in real estate, and typically the first thing people think of when they consider owning rental income property.

It is true. One of the advantages of owning income-producing property is that income generated from rent can be quite considerable if a property is bought and managed correctly. When a real estate investor does not overpay for a property, can keep expenses down, the apartments rented, and the building maintained to an optimum level, a real estate investment can make the investor money—even at night when sleeping!

Perhaps not as much as tenants typically feel the landlord is making. Most tenants believe that the owner is doing nothing but making money. But tenants never see real estate tax bills, water and sewer bills in most cases, bills to repair the building, and other costs associated with rental property ownership such as management services and secretarial work, advertising, or legal council.

There are other reasons for owning rental property. You may want to increase your net worth or take advantage of certain tax incentives, or simply desire to gain a sense of achievement. These are possible in the world of real estate investment.

Okay, what about the disadvantages associated with income property ownership?

Foremost, the amount of work involved. Unless the real estate is a piece of raw land and no one cares whether the grass is cut, property ownership is labor intensive.

When someone else lives in your property and pays you rent to live there, you can count on spending some time and effort maintaining and improving the property. The more apartment units you own or are responsible for, the more work you can count on. The more units you own or manage, the more responsibility and liability you have to make sure the rental units and property are safe for residents and visitors.

The bottom line is that real estate investing can, and does, make money. But it takes money, and it takes work.

Just remember, life is a series of trade offs. Owning rental property can be a profitable and interesting business, and if worth the cost to you, then it is an investment opportunity you dare not miss.

Are you new to real estate investing, or about to become a real estate investor? Perhaps you are wondering, how does real estate investing work, or just want more investing real estate information because you want to sell rental property.

If so, if you are just getting started in real estate investing and want to learn more about the nuances of investing in rental properties, this one is for you.

Develop the Correct Attitude about Investing in Rental Properties

Foremost, beginners must strike the thought that investing in rental properties is like buying a home and accept the idea that real estate investing is business.

A home is where you live and perhaps raise a family; a rental property is business to make money and perhaps pay for the home.

Too often, beginning investors set out to purchase rental property thinking the best properties must have curb appeal and exciting amenities–only to end up suffering unfavorable results

1. They purchase a rental property because it is beautiful but they never make money, or worse, they lose money
2. They miss an opportunity to make some real money because the thought of living in the rental property is unimaginable

Beginning investors will do well to keep in mind that they will probably never occupy the property; and the property is a business for making money. In the words of a very successful real estate investor, “Only women are beautiful, what are the numbers?”

Develop Meaningful Real Estate Investing Objectives

The next step for the novice investor is to develop a meaningful set of objectives to help frame an investment strategy

1. How much cash are you willing to invest comfortably
2. Are you expecting cash flow or merely looking to make your money when the property is resold
3. How long do you plan to own the property
4. What amount of your own effort can you afford to contribute

Acquaint Yourself with the Rental Property Market

To start investing in rental properties, for beginners, it is assumed little is known about prices for rental property in the local market and therefore helpful to begin the process by learning as much possible. Here are some helpful resources

1. The local newspaper
2. A local bank or mortgage company
3. A local appraiser
4. The county tax assessor
5. The local MLS
6. A qualified local real estate professional

Work with a Qualified Real Estate Professional

Working with a real estate professional is a great way for beginners to get started with rental property investing. They can acquaint you with local market conditions, recommend properties that meet investing objectives, and discuss strengths and weaknesses about a property’s performance—if they understand rental property!

The mistake most beginner investors make is thinking that real estate professionals who successfully sell houses also qualifies them to sell rental property; not necessarily true.

It is just smart when investing in rental properties for beginners to be sure they will work with real estate professionals who understand how to measure rental property profitability and are capable of presenting reports and data needed for you to make wise investment decisions.

Call several brokers in your area and ask to speak with an in-house rental property expert. Schedule times you can interview them; ask about experience and then have them show you the types of investment reports they would produce; listen carefully as to whether or not they understand some of the more popular nuances like an APOD, cap rate, and cash-on-cash return. If not, locate others; otherwise make your selection and get started.

Remember, It is Your Money at Stake

As a real estate investing beginner, if you want more control on how your money gets invested and prefer not simply to rely upon the advice of others, then you should consider—absolutely consider—making an investment in quality real estate investing software and gaining the ability to do your own rental property analysis.

Real estate investing is business; you are about to become a real estate investor and begin the business; it is your money to gain or lose; it just makes sense for you to prepare in every way possible to succeed.