WHAT OUTCOME DO YOU WANT TO ACHIEVE WITH YOUR SIOUX FALLS, SD, REAL ESTATE INVESTMENTS?
Are you investing in Sioux Falls, SD, rental properties with a long term or short term strategy? Are you going to hold them for 5 years or 30 years? If your goal is to hold a property for 30 years and then cash out for retirement, you might consider locking in a 30-year mortgage. This long-term goal will cause you to think longer term and execute different strategies as opposed to a short term strategy such as “flipping” a house. Your vision and the outcome you hope to achieve influences everything else you do, from maintenance, to capital improvements, to your mortgage. Set your goals, build a crystal clear mental vision of your success, and then create your plan for today with the future in your mind’s eye.
WHAT EXPERIENCE DO YOU HAVE IN THE INDUSTRY?
Owning a rental property in Sioux Falls, SD, involves many disciplines. It’s the same process someone goes through when starting a business. A smart entrepreneur seeks to build a team which includes an accountant, attorney, banker, IT person, and an insurance agent as the foundational members of their team. Establish a discovery process that will help you determine who will be a necessary and good fit for your team. Interview each professional and find individuals who understand the industry and your goals, have the ability to help you meet those goals, and can help you avoid the common pitfalls of owning rentals.
HOW MUCH TIME DO YOU EXPECT TO SPEND ON THIS INVESTMENT OVER THE FIRST 12 MONTHS? OVER THE NEXT 5 YEARS?
Many experienced investors suggest doubling the time you project spending on your future investment, and if you are still willing to put in that amount of time, the investment makes sense. The rental business isn’t a “get rich quick” scheme. It takes work, training, teamwork, and more to make it a profitable investment in your portfolio.
DOES YOUR REAL ESTATE AGENT HAVE EXPERIENCE IN RENTAL PROPERTIES?
Your Sioux Falls, SD, real estate agent must have experience in rental properties, not just selling homes. As with any major decision or investment, it is best to seek council from an experienced expert who can give you an objective opinion before you spend any money. If your real estate agent understands rental properties, they will be one more resource from whom you can draw knowledge and mentorship.
HOW MUCH CASH WILL YOU HAVE ON HAND FOR UNEXPECTED VACANCIES IN THE FIRST YEAR?
You should never depend solely upon the rent to pay the mortgage. You need to have a reserve, so that if the tenant leaves or does not pay rent for any reason, you can still cover at the very least two months of the mortgage.
HOW FAMILIAR ARE YOU WITH YOUR AREA’S HOUSING LAWS AND REGULATIONS?
You must read the laws and regulations of your state pertaining to rental property. Familiarize yourself with Federal and State Fair Housing Law as well as HUD (US Department of Housing and Urban Development) regulations on certain areas of concern such as lead based paint and other environmental hazards.