6 Mistakes to Avoid When Operating Rental Properties in Lynnwood

The Joseph Group Jul 2022

Ian Joseph

“Clients first!” – is a huge part of the DNA that Ian Joseph and his Team have established at The Joseph Group. This motto helps them focus on striving for the highest level of customer experience, for their clients (landlords) and customers (tenants). In fact, Ian strongly believes that in life, family and business, you must strive to give more than you receive. “You can have everything in life you want if you help enough other people get what they want." - Zig Ziglar

There is more to renting out a house in Lynnwood than simply buying a property and getting tenants to pay off your mortgage. Are you looking o invest in real estate for the first time or want to expand your investment portfolio? You will want to do your due diligence and perhaps even invest in property management services to help you make the most of your investment.

To save yourself a few headaches, read through these six mistakes that investors often make when purchasing rental properties.

1. Not Having a Plan

When making investments, few people create success by simply 'winging it.' This is especially true of the rental property market. Therefore, when looking to invest in a rental property, it is vital to do your due diligence. Below are a few pointers to help you formulate a good plan:

Take time to research whether the property will generate any income. Work with a property manager to estimate rental income and expenses, like taxes, insurance, and repairs.
What is your budget? Are you purchasing with a lump sum of cash, or have you applied for a mortgage?
What kind of rental property are you interested in? Do you want to invest in a single-family home, duplex, or multifamily property?

In addition to short-term plans, make sure each property fits into your long-range goals!

2. Not Conducting Enough Rental Market Research

Property owners must ensure that a rental unit will be a safe investment and make good returns. To that end, it is essential to research the property and the area in which you are planning to buy.

Does the neighborhood attract good renters?
To help gauge your potential rental income, find out how much other renters in the area pay for properties similar to yours.
Check whether there have been any significant changes (demographics, traffic congestion, etc.) in the neighborhood recently.
Are there any developments projected for the area that could influence rental rates or occupancy?

If you're not sure how to find the information you need for thorough rental market research, connect with a Lynnwood property management company!

3. Forgetting About Tenant Needs

Spend some time thinking about the type of tenants that will likely rent the property and how to help the rental appeal to those tenants. Tour the neighborhood and surrounding areas to note the proximity of different amenities. Families want good schools, parks, and recreational facilities. Young working adults might prioritize convenient access to public transport and entertainment.

Will the type of tenants you hope to attract want appliances in the unit? Are these appliances already in place, or will you need to spend capital on appliance installations? The right amenities in the property also help you find good renters and set higher rental rates.

4. Overpaying for Properties and Underestimating Costs

It is easy to get caught up in the excitement of buying a new property. However, when investing, don't let your excitement overshadow the realities of the numbers. Property owners must avoid overextending their finances by overbidding on a property to secure the deal. Remember: if one property doesn't work out, there will be another suitable investment property when the time is right.

In addition to finding properties at good prices, there are many costs in maintaining a rental property. Besides the mortgage payment, factor in the cost of property taxes, insurance, maintenance of the property, and appliances such as the oven, furnace, fridge, washer, and dryer. Make sure the monthly rental amount is enough to cover costs and generate good cash flow!

5. Not Having the Right Financing

There are many money lenders out there with a host of creative ways to aid you in purchasing a rental property. Shop around for the best financing that won't cost you an arm and a leg further down the line. Also, make sure you understand how mortgages for investment properties work compared to financing for a primary residence.

6. Buying and Manage Properties Without Expert Help

If successfully investing in rental properties was simple, everybody would do it. The fact is—it's a complicated process and a lot of work! From finding the right property for your budget to securing a reliable renter and everything in between, operating rental properties is a full-time job.

Asian young man client, tenant buy home, apartment

Real estate investors should make use of multiple resources to ensure investment success. These resources can include:

An experienced property manager to help you find and manage a fantastic property at a suitable price and with excellent returns. Choose an agent well-versed in the specific type of property that fits your goals and is knowledgeable about the area in which you wish to purchase.
A reliable home inspector to ensure that you don't miss any issues that will make your new property a costly liability down the line.
A trustworthy and skilled handyman to sort out basic maintenance issues or repairs before tenants move in and during lease terms.
An attorney to review the sales contract and lease agreements and help you keep operations legal.

Building a good team of professionals helps investors reduce risks and optimize returns!

Professional Property Management Services Help Investors Avoid Mistakes

A great way to tick all these boxes is to hire a company that specializes in property management services. A proficient property manager can save you both time and money. They have a network of reliable service professionals who can help you through the various stages of finding an ideal investment property, securing reliable tenants with an attorney-approved lease agreement, budgeting, maintenance, and much more!

Trying to do everything on your own can lead to income loss and lawsuits. To find the right Lynnwood property management company for your needs, try searching for "property managers near me" or reach out to The Joseph Group! Having the right team of professionals will help you make the most of your real estate investments. Contact us to learn more about how we help rental property owners in the area.