You’ve probably read it somewhere – more millionaires are created within real estate than any other market or industry. It’s true – in real estate there are various ways to make money. One of the key ways investors in real estate make money is renting out an investment property. Nowadays you have people renting small apartments so they can rent out their homes or people are renting their rooms through a vacation rental service. With that said, just because it’s being done doesn’t mean it’s a good move for you. Here are things to consider before deciding to rent your Austin property as an investment.
Demand for Rentals in Your Market
This may seem silly to write about Austin, Texas but we are putting this here for anyone who may be reading this that is in another market. Before deciding to rent your home you need to do a thorough analysis on the demand for rental homes in your area. Seriously, now that you’ve decided to become a real estate investor you need to make sure you can actually make money and you need tenants to earn rental income. With that said, Austin, Texas is one of the biggest rental markets in the nation. According to this recent rental market data, Austin has a higher average rent than other Texas cities such as Houston, Dallas, Fort Worth & San Antonio. Pretty crazy once you realize how much smaller Austin is compared to these markets. Austin also receives market support from the 152 people moving here per day. This type of growth fuels a booming rental market making Austin an excellent area to own investment property.
The Condition of the Property
Just because you own real estate and you want to rent it out doesn’t mean someone will just jump at the chance to live in your property. Therefore, inspecting your home and making sure it is rentable as well as desirable can let you know if your property has what it takes to be a rental. To determine this, you’ll want to conduct a rental market analysis to check out other properties in your area to see what rents and what doesn’t. Chances are you’ll need to conduct a few repairs & upgrades to bring your home up to rent-ready condition. If you’re confused on how to conduct your analysis there are resources available to you for this. Stone Oak Property Management can provide you with a full Market Analysis for your property and we’ll always shoot your straight about your property and let you know what we think.
Know the Law and Become Familiar with Property Code
As a landlord in Austin, Texas property code is going to dictate pretty much everything you do with your property. Maybe you can’t memorize the whole thing, but you should definitely be familiar with the Texas Property Code. As a new real estate investor, you’ll want to make sure you conduct your new venture in a completely legal manner. Be aware of any and all federal, state & local housing laws that apply.
Your Property can be a Detriment to Your Wallet
Renting out your home is a great way to earn money. However, just because you’re renting out your Austin home now doesn’t mean you’ll be rolling in cash every single month. Your property isn’t always as passive as you hope it will be. Depending on which direction you take with your property you’ll want to incorporate costs such as marketing your property, capital gains tax, insurance as well as any repair costs that come up, etc. Preventative maintenance throughout the life of your property can help you avoid unexpected big-ticket repairs. Another important factor here is how much your property will rent for monthly. The aforementioned comparative market analysis will help you determine how much your Austin rental property will earn.
The moment you rent your property to tenants it no longer becomes your home and instead becomes their new home for the duration of their lease. Managing an active investment property takes time, attention to detail, organization and responsiveness. When your tenant’s water pipes bust at 3 AM are you going to be available for immediate response? If not, you may consider hiring a property manager to handle your new investment property. Yes, property management has a fee associated with it, but over the long term property managers can easily pay for themselves and a great Austin property management company is worth their weight in gold. Your property manager should understand the entire process and make sure investment operates well within the confines of the law leaving you collect your rent check every month. For any investors looking to make real estate a passive investment property management is definitely the way to go!
Taking on an investment property gets a lot easier if you have supporting documentation that helps you in all situations. What are we talking about? The lease is a great example. Anyone can google “lease document” and print the first thing you find on Google. However, you’re not even sure if this lease complies with the guidelines set forth by your state or has the proper protections and clauses included in the lease that help protect you, the landlord. You lease will specify certain things such as lease duration, security deposits, rent due date, late penalties, maintenance responsibilities, pet policies, eviction terms. Having strong documentation in place that protects you will make your investment property much easier to run!
While just a brief overview, this is a great start to ensure your Austin property is capable of becoming a successful rental property. If you have any questions about your Austin home and its potential as a rental property contact our Austin property management team today!