Investing in single-family rental properties can be a smart way to line up reliable returns on your money, but the devil is in the details. Thanks to digital investment developments, there are more options than ever for participating in this market.
Due in part to the financial crisis, the percentage of single-family homes that are rentals has risen in recent years, increasing 31% since 2005. Today over 14 million homes are rented, according to U.S. Census Bureau data. According to the latest report from RealtyTrac, average returns for these properties stand at 9.04% nationwide, making this an attractive option for investors looking to diversify.
Individuals looking to participate in this market have to consider the work that goes into finding promising properties and then managing them to ensure that profitability continues. With professional property management, investors leave the details to the experts.
What goes into SFR property management?
Efficiently managing a SFR property requires market knowledge and expertise in acquiring good tenants, providing services to tenants, coordinating property maintenance, and streamlining routine business operations.
Securing new tenants is a routine task for experienced property managers. They advertise properties that are about to be vacant, respond quickly to inquiries, and can show properties at a time that’s’ convenient for their potential tenants.
Screening potential tenants helps protect the owner’s investment. It’s important to verify employment, screen for evictions, and complete a background check before any agreement is reached. A policy requiring rental insurance adds another layer of owner protection.
Keeping the tenants happy can be a time-consuming aspect of management, but is critical to long-term success. This involves making it convenient to submit rent payments and conduct other business. It also requires that repair requests be met promptly and to the tenant’s complete satisfaction.
Once the property is rented, it’s important to keep up with maintenance and conduct regular property inspections. Biennial inspections can help reduce risk and will keep repairs up to date. Periodic reviews of property insurance are also a good idea to make sure that coverage is adequate.
Optimizing rental rates is a strategy that requires knowledge of the local market to determine when to raise rents and by how much. Additionally, it requires a strategic plan as to have leases expire at the times of peak demand.
If tenants default on their rent it’s important to take action immediately, providing prompt delinquency notices. It’s often possible to work out a payment plan with tenants when management has a positive existing relationship with the tenant. On occasion though, these efforts fail, and management moves forward with eviction.
These are the details that make an SFR a profitable investment. For the individual investor seeking to participate in a variety of locations, professional property management is a great way to ensure that all the bases are covered.
With more real estate investments handled online every year, there are great opportunities for smaller investors to purchase SFR’s that have been screened and selected by professionals. And, the properties don’t necessarily need to be in the same part of the country. This opens up a wealth of new options for investors and has helped make room for the “little guy” in nationwide SFR investment.
HomeUnion is pioneering a better way to invest in real estate in fully managed single-family rental properties via a secure, hands-free investment platform. Learn more by connecting with our team or by browsing our website at your leisure.