Becoming a Landlord in Nashville? 5 Important Things for You to Consider

Right Facing Red For Rent Real Estate Sign in Front of Beautiful House.

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Right Facing Red For Rent Real Estate Sign in Front of Beautiful House.

Rental growth in Nashville is considered one of the highest in the country’s secondary housing markets. In fact, rentals rose nearly 4% on average in Nashville in 2014, according to some reports. There were times last year when Nashville’s rental growth rate was the fifth best in the U.S. But what is more interesting is the fact that rentals are still affordable here compared to several other cities. Average rents in Nashville hovered around $800. Occupancy rates are also high, almost 96% in most neighborhoods.
As there has been a phenomenal increase in job opportunities, many young people are moving to Nashville. The biggest attraction for them is availability of good quality accommodation options at comparatively low rents. This has provided a great opportunity for those who are looking to buy a rental property to earn some passive income.
If you are a real estate investor, it’s actually a great time when you can expect high yields from your investment. All a landlord needs to do is hang a “for rent” banner in the yard, and he or she can smile all the way to the bank.
However, if you are becoming a landlord for the first time, you may find property management a challenging task. Below are a few things, you must know in order to successfully fulfill your responsibilities as a landlord:
Location is important
Before buying a rental property, it is extremely important that you pay close attention to your choice about the location. Gather economic data specific to the neighborhood where you are buying. You should check the unemployment rate, job growth projections and the property’s proximity to public transport, shopping centers and other such facilities. It will help you determine whether your property will attract tenants and how much rental yields you can expect.
Ensure whether you will be able to make money on your investment
Another important step towards becoming a landlord is to calculate the cap rate in your local market. Cap rate will tell you the rate of return on an investment (ROI). Higher the cap rate, bigger will be your profits. You can also buy cap rate reports from any of several online platforms. Make sure the source is authentic.
Make sure you can manage the property
You will need to put some amount of time and efforts into managing a rental property successfully. It’s because you will have to follow several obligations as a landlord, from ensuring the property’s upkeep and screening tenants to collecting rents. If you are time poor, you can consider hiring a property management agency.
Be a smart buyer
Short sales and real estate owned (REO) properties are the best choice for investors in most cases because they are often bargain buys. However, before buying a distressed property, you must understand the laws which regulate these types of transactions. You should work with an experienced professional to help you guide through the process.
Get your finances in order
You will need a huge amount of cash to make the down payment even if you are financing your purchase. You will also need a higher credit score to be eligible for a mortgage. So make sure that you understand your financial obligations when you plan to purchase a rental property.
These are just some basic steps you need to take to become a successful landlord.