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Smart Rental Property Investments - How to Make Them (Part 2)

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As mentioned in Part 1 of this article "Smart Rental Property Investments - How to Make Them, investing in rental property is a whole different ballgame today as compared with only a few short years ago.
The challenging state of the economy today makes having knowledge about rental property investing more important than ever if your investments are to turn out successful.
On that premise, let's continue with and complete our list of Part 1 recommendations that will help you make prudent rental property investments.
  • Know thy neighborhood: What are the demographics for the area where your prospective rental property is located? This includes the average age and incomes of residents, education levels, etc.
    This will provide you with information on the general tenant population of the area.
    Also, the condition of the neighborhood and whether or not it is improving or declining must be known.
    If you find it's on the decline, then don't walk away from the property - run! It's not worth risking your hard-earned money no matter how promising an investment the seller might tell you the property is.
  • Conduct your "homework" ahead of time: Before getting involved with purchasing rental property, learn the basic ground rules of the business first.
    This includes learning landlord-tenant laws, understanding your rights and responsibilities as a landlord/property owner, knowing the rights and responsibilities of tenants, and developing basic repair and maintenance skills.
  • Hire a qualified real estate attorney: Being represented by a real estate attorney during the sales transaction can prevent a lot of potential problems for you.
    It's always easier to hire an attorney to "keep you out of trouble" than it is to hire one to "get you out of trouble".
    Hiring a knowledgeable attorney (and one that you are comfortable dealing with) can be a great "insurance policy" for protecting the largest financial transaction that you'll probably ever make.
  • Get proof of property expenses: Don't rely on verbal statements from the seller (or seller's agent) on the property's expenses.
    Instead, play it safe - get copies of "actual bills" and invoices to verify the costs of operating the property.
    Sellers can sometimes understate expenses and overstate rental income in an attempt to falsely justify a higher sales price for their property.
  • Obtain information on tenants: As a buyer, you have the right to get rental information on the property's tenants.
    This includes information on any rental agreements or leases, and any security deposits and prepaid rents that have been paid to the current owner.
    This information can be obtained by mailing "estoppel letters" to the tenants.
  • Hire a reputable property inspector: A good inspector will determine the overall condition of the property and disclose any defects or problems that require repair or replacement.
    The costs of any repair or replacement work that may be needed can be substantial.
    They would normally have to be subtracted from the sales price or negotiated with the seller.
  • Develop a "long-term" investment outlook: Patience is a virtue, and if you develop this trait you will reap handsome rewards in the future - the pot-o-gold at the end of the rainbow will await you! Slow and steady wins the race.
    Resist the temptation to join the "get rich quick crowd" and you won't have to worry about being left out in the cold!
In a nutshell, the road to rental property investment success can present many twists and turns along the way.
It can certainly be made much smoother and less risky by incorporating the above investment recommendations.
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