Ready to launch your rental property business? In Parts 1 and 2 of this series, Considerations and Planning, we questioned our motivation for getting into the rental property business, took stock of the resources we have available and looked at the basics of planning our operations. With our thoughts and resources aligned, we’re ready to put our plan into action. We’re ready to launch, right?
Here’s a simple checklist to help determine if we have everything in place before we launch. Customize this list based on your situation.
- Draft business plan with clear mission statement and objectives.
- Target property acquisition criteria.
- Either cash on-hand or pre-approved purchase loan financing.
- List of contractors available to help with everything from refurbishment after purchase to recurring maintenance and services.
- Formation of the legal entity we will operate under (e.g. LLC or corporation) if we aren’t going to operate under our own name as a sole proprietor.
- List of REALTORS® and others who will help us locate properties to buy.
When all tasks on our checklist are completed, we’re ready to launch.
A business term frequently in use today is grind. There are many definitions floating around, but for our purposes we’ll say our grind is the primary activity that drives our business – the single thing we do almost every day or our business would die. Identifying a single grind can be tough when we’re a one-man show doing everything ourselves: acquisitions, property management, accounting, administration. In the launch phase of our rental property business, our grind is acquiring rental properties. Without rental units we have nothing to manage and no income. In most real estate markets, other rental property investors are out there beating the bushes for good rental units, too, so our grind can be tough and competitive. Good rental units are snapped up quickly, often in quick-closing all-cash deals.
We need to stay on top the market by setting up automatic email notifications for new listings with our agents and answering or returning phone calls and emails immediately. If no properties that fit our criteria are coming on the market, we may want to submit inquiries or unsolicited offers to owners of properties not currently listed for sale. We should have a standard set of offer terms ready and be prepared to submit competitive offers quickly. Our grind is finding potential acquisitions, reviewing each opportunity and deciding quickly whether or not to make an offer. We wake up every day with our focus on that task.
Managing our acquisitions profitably is the next phase in our business, though adding to our portfolio of properties is an an-going effort as long as we have the resources to do so.
In this series of articles about getting into the rental property business, we’ve considered our strategies and the resources we’ll need, created a plan and launched operations by beginning the property acquisition process. There is obviously much more involved in growing and operating our business, but we’ve taken the first steps by simply getting started. Good luck!
Have questions about getting into the rental property business or other real estate issues? Drop me a line: Contact Us.
About Real Living with Broker John™
Each week Real Living with Broker John™ provides innovative tips and information regarding all aspects of owning, buying and selling real estate. John Souerbry is Broker/Owner of Cordon Real Estate, a full service brokerage in California’s San Francisco Bay Area (CalDRE License 01370983). Contact John with questions or comments regarding Real Living or real estate in Wine Country/North Bay, East Bay and Silicon Valley.
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