Keys for Investing in Tracy Rental Properties

Keys for Investing in Tracy Rental Properties


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Keys for Investing in Tracy Rental Properties - Properties 180 LLC - Modesto, CA's Premier Real Estate Solution CompanyTracy rental properties can provide great opportunities, provided you follow the simple tips below and adequately follow through with your share of due diligence.

Location

As everyone knows when it comes to real estate, location is key. Choosing a residential rental property in a great location is important for long-term equity growth. Proximity to schools, shopping, public transportation, and major highways are factors that determine what kind of demand and income you can expect from your property.

Know the Tracy Property’s Value

Research rental rates in the Tracy areas you are considering. A common mistake among investors is overvaluing their Tracy rental properties, resulting in vacancies.

Consider Your Clients

It’s also helpful to know your potential tenants. You want to understand which locations they consider ideal so you can purchase a property that will be in demand. There’s no sense investing in a property that will be a hard sell.

Start Small

Choose an affordable initial investment, like a single unit or a duplex, versus an entire apartment building. In case things don’t work out as planned, you can minimize your risk.

If you’re new to real estate investments, you might want to consider avoiding Tracy rental properties that require major repairs as the added expense to bring these units up to date could create an unnecessary financial burden. However, if you’re the type of person who doesn’t mind getting their hands dirty or you are skilled handyman/renovator, you might be able to find a  great deal on a fixer-upper and save money by doing the work yourself.

Do You Need a Property Manager?

Another thing to consider is whether or not to use a property manager to serve as a middleman between you and your tenants. Even though they may take a percentage, having someone available to deal with day to day problems could prove to be a valuable asset and well worth what they’re being paid.

Consider the Cost to Income Ratio

Running the numbers to make sure potential Tracy rental properties are profitable is extremely important. Each rental property should be treated as an individual business to ensure a solid investment. Accurately estimating the rental income, ongoing maintenance costs (such as lawn/pool service), potential periods of vacancy, and eviction costs, including lost revenue due to a non-paying tenant, are all factors that must be considered when getting into the rental business.

There may also be insurance expenses, taxes, dues, and other items which may not have stood out when initially considering your investment.

Be Smart with Improvements

Don’t over-improve the Tracy property. Tenants are not always going to treat the property with care, so it’s more important to focus on positive cash flow rather than spending on repairs and upgrades that may need to occur after a tenant moves out.

Don’t Just Look at the Appreciation Value

Relying on appreciation alone is not a sound business plan. Tracy rental properties should have positive cash flow with an 8-15 percent return in a residential market. Investment real estate is often valued by its capitalization (cap) rate, which is calculated by taking the net operating income divided by the going cap rate in the neighborhood, to come to an appropriate price.

Think About Maintenance

Consider the required maintenance for the type of Tracy property you plan to purchase. With a single family home, the landlord is typically responsible for things like lawn mowing – although this can be stipulated in a rental agreement. When it comes to a condo or townhouse, maintenance is usually included as part of monthly dues.

Pick the Right Tenant

Finally, and perhaps most importantly, is to choose tenants wisely. Make sure you have a solid application process that evaluates a tenant’s credit history, work/employment history, and previous rental history.

Having to evict a tenant after only 3 months because they fall behind making payments is not only a huge inconvenience, but will likely result in a significant financial loss. Tenant income should be at least three times the rent and verified by their employer.

As long as you take these things into account and are smart about treating your property like a business, there’s a great chance you will be successful leveraging Tracy rental properties as investments.

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