The Denver real estate market is filled with eager investors who are excited to obtain properties for investment purposes. Although Denver is one of the hottest investment spots in the country, many new investors forget that there is a great deal of research that should be done prior to planting a FOR RENT sign in the yard. Although it may be tempting to go to sleep with visions of gold coins dancing in the air, let us examine a few very important questions that every savvy investor should be answering before actively seeking a tenant for a property.
1. Have you done your homework in gathering comps on the property....I mean, REALLY done your homework?
Finding good comparable data is not only important, but it is essential in having a solid investment strategy on your property. The Live Urban Leasing Team gets phone calls almost daily from investors who are hungry for rental quotes on their acquired investment properties. However, some investors do not always like to hear that their two bedroom, one bath bungalow is not worth the $5000 monthly rental rate that the investor is mentally salivating over! The fact that rental rates have climbed in metro Denver does not guarantee that renters will be willing to pay over what the property is actually worth. Amenities, location, proximity to public transportation, age of property and the overall condition of a rental still play a vital role in pricing. So, if you want and need to charge a specific monthly rental to make your investment property work for you, make sure that the property is in an area and offers the amenities that that price range demands.
2. What does your lease agreement say?
Although lease agreements are never fun to read or to sign, they certainly come in handy when you need them! Do you have a lease agreement that protects your investment property? Is it fair and something that a tenant will agree to sign? Does it leave loopholes that would allow for problems down the road? To some investors, the notion of having a real estate attorney draft a lease agreement that is specific to an investment property seems like an exorbitant expense and a waste of time. However, depending on the type of rental property that an investor is dealing with, a professionally crafted lease agreement may be in his or her best interest. At the end of the day, the lease agreement is the glue that binds all terms and agreements together. So, make sure that it is one that protects the property you worked so hard to obtain!
3. Who will be managing the property?
To some investors, the thrill of being able to try their hands at property management is a very appealing concept. To others, it stinks! For those that may be interested in handling the day-to-day operations of a rental property (rent collection, evictions, maintenance, etc) make sure that you are willing to provide the type of service to your tenants that you would expect from a rental service. For those that shudder at the mention of property management, please know that there are several companies that are willing to take that responsibility off of your plate...for a monthly fee. Fees can vary between management companies, and it is very important to screen, interview and review your property managers prior to hiring them to ensure that they will follow through with what they promise to do for you and your tenants
There are far more details to examine when prepping an investment property for a rental experience. However, for the sake of your eyes...we will not go any further! Should you be interested in speaking with a Live Urban real estate professional that works in the investment and rental sector, please send an email to email@example.com. Be smart with your investments, be targeted with your questions, and you will be able to tackle the investment opportunities that are out in Denver's red hot market.