Investing in rental property can be a lucrative but also risky endeavor. When you own real estate in Sonoma County, you have the potential to see the value of your asset grow, and that’s attractive. But, you need patience and you need expertise. You’re not going to make a lot of money overnight as a real estate investor.
Rental properties in Sonoma County earn their owners a lot of rent, and it’s a good way to earn some passive income when you do it right. Today, we’re sharing some of the questions you need to ask yourself as a new investor, and what kind of challenges you can expect along the way.
Invest in the Right Sonoma County Rental Property
Perhaps you already own a home in Sonoma County, and that’s where you plan to start. If this is the case, you’re in a great position as a new investor.
If you are looking to acquire your first property, you have to make sure you know what you’re looking for, and what’s going to earn you the best ROI. You also need to consider how the property will fit your investment goals. It has to make sense mathematically, not emotionally because your rental property is a business, not a home you’ll be living in yourself. Consider your prospective tenants, who will be looking for a well-maintained home in a desirable neighborhood.
Many first-time investors make the mistake of buying a cheap property that needs a lot of work. This is a strategy that may have some merits for more experienced investors, but it’s not a great way to start your real estate investing career. The rehab that’s needed means there will be a delay in getting that property listed on the market.
Proper Rental Property Pricing
New investors are often confused about how to price their rental property. You probably have an idea about what you’d like your property to earn every month, but the rental price is really market-driven. It doesn’t matter how much cash flow you’re after or what you’ll need to make your mortgage and tax payments. You shouldn’t expect your Sonoma County investment property to cash flow right away. It’s going to take some time. If you try to price your rental home at a point that you’ll earn a profit every month, you’re going to run into several different road blocks.
Evaluate the market thoroughly and check the prices for competing properties that are similar to yours.
Smart investors will talk to a property manager before buying a property so they know what kind of rent they can expect. Remember that vacancy is more expensive than anything else in real estate. Don’t overprice your property.
Rental Property Maintenance Should Be a Priority
Every rental property will need work, especially once you have tenants in place. Wear and tear is going to occur, and systems and appliances will need to be repaired and replaced. Prepare for this, and make sure that routine and emergency maintenance issues are a priority for you and your tenants. Any deferred maintenance or maintenance that’s left unreported by your tenants will damage the home and drag down its value.
When a tenant makes a maintenance request, respond to it right away, or at least let the tenants know when you’ll be able to take care of the problem.
Invest in Professional Sonoma County Property Management
Unless you have the time, knowledge, and experience to manage an income-producing property on your own, hire a professional property manager for your real estate investments. You need someone who knows the local market and understands the property management industry. Find a company that can accurately price the home, market it, and screen for highly qualified tenants.
If this is your first investment property, you don’t know how easy it is to make an expensive mistake. These errors are almost always unintentional, but they’re also avoidable. Renting out a home in California is more complex than ever. There are strict rent control and fair housing laws in place, and evicting a tenant requires a lot of legal steps.
We can talk more about what you’ll have to prepare for as a new real estate investor. Contact us at Healdsburg Property Management with any questions.