Real estate is a constantly growing industry that’s popular for its resilience and profitability. A perfect combination, right? This is especially true in times of economic uncertainties such as the 2020 global coronavirus that practically impaired livelihoods, businesses, and investment schemes. The real estate market has proven that it can recover from these economic crises and remain a lucrative venture for both newbie and veteran investors alike.
One way to drench your feet in the waters of real estate investing is converting your house and lot in the Philippines into a rental property to generate passive income. If your place of residence is relatively near a tourist spot, that’s a major reason why turning your property into a passive income stream is a step in the right direction. In this blog post, we’ll discuss the nitty-gritty of investment properties to earn passive income and achieve financial freedom.
Major Factors to Consider Before Venturing to a Rental Business
If you’re seriously planning to convert your personal property into a rental business, there are major steps and considerations you need to take account first. What are these important factors and aspects for rental properties? Let’s delve more into it below.
Full-time commitment
Running a rental business, be it a residential, industrial, or commercial real estate, is going to demand your full-time commitment. This is especially true during the early stages of your rental business, where you have to handle the paperwork, marketing, and even property inspections and regular maintenance. As such, this will eat up your time. And this will become even tougher if you decide to retain your office job and still intend to pursue your rental property business as the landlord.
Financial preparedness
It is expected among real estate investors like you to be financially prepared. Notably, financial preparedness does not only entail being able to maintain a rental property until a tenant’s occupancy. You shall also expect paying for future repair and renovation needs, capital gains tax, digital and traditional marketing efforts, your broker’s commission should you hire one, and other associated fees. This should give you proper expectations and not be caught off guard when you suddenly need to pay a significant amount of taxes and fees from renting or selling your property.
Turn Your Investment Property into Rental Income this 2023 and Beyond
There are various ways to make money in real estate. This includes pre-selling properties, rent-to-own, and real estate investment trusts (REITs), among others. But here, we will zero in on short-term and long-term rentals.
But before you officially kickstart your initial investment toward earning passive income, set out a plan that will ensure your real estate investment will be efficacious and foolproof. Consider the following best practices to implement as you soak your feet in the sea of real estate investments.
Conduct local market research
One crucial step to kickstart your passive income ideas through renting your property is conducting local market research. This means assessing the overall rental demand in your area, comparing prices of properties that are similar to yours, and understanding the prevailing rental rates. You can also tap a real estate agent or any qualified professional to provide you with expert advice on the real estate market in your area.
Consider making minor repairs and upgrades
To make your property more desirable among prospective tenants, making minor repairs and sprucing it up is a must. If there are impending issues like roof damage, improper electrical wiring, and poor home hygiene, be sure to address them immediately. Note that the property’s value is also appraised by its overall condition, so it’s only right to make some upgrades that wouldn’t hurt your pockets.
Decide who will manage the property
Becoming the landlord of your own property necessitates your full commitment. Meanwhile, if you hire someone to do the property management on your behalf, it would be more convenient for you, but it’s not without a significant cost since you will have to compensate your property manager. But either way, deciding who will manage your rental property needs to be finalized long before you put your property up for tenancy.
Implement traditional and online marketing strategies
In attracting tenants, your traditional and digital marketing efforts can make a tremendous difference. For starters, you can use social media to market your property, especially on Facebook, where most Filipinos spend more time to browse for entertainment, products to purchase, and services to avail. And yes, sellers and consumers can sell or buy properties online. Aside from social media, you can rely on offline marketing strategies such as using leaflets and referral through word-of-mouth advertising.
Carefully screen potential tenants
Make tenant screening an integral process of your rental property business. It comprises doing a background check and verifying their employment status alongside their payment capabilities by referring to their current credit standing. This ensures that you will only allow reliable tenants who will not give you a headache when it’s time to collect their rent.
Pen a comprehensive rental agreement
A lease contract is an essential legal document that protects both you and your tenant from costly and stressful disputes. It outlines that the lessee agrees to the terms and conditions, including rules on payment deadline, duration of tenancy, and even whether pets are allowed inside the property. As such, make sure to thoroughly discuss the terms with your tenant and settle any concerns and disagreements before any contract signing gets going.
Develop and maintain a good relationship with your tenant
Customers come and go. But one key to making them stay is by developing and maintaining a good relationship. One good practice is to not make every encounter with your tenant purely business or transactional. Instead, strike a conversation just like how you would to a friend you haven’t seen for quite some time.
Plan your long-term goals
Finally, you must ensure to take into account your long-term goals for your rental property, including plans for expansion, the prospect of hiring a property manager, or if this is something you see a long-term career out of. You might also want to venture into a real estate investment trust, which is a type of mutual funds best suitable for beginners. But nonetheless, your plans for the future are essential in taking your next steps as a part-time or full-time landlord.
If you don’t have a property to rent out yet but plan to purchase one, Asterra is a top choice for best value for money condo for sale among modestly earning Filipino families. Our housing communities nationwide are good for rental businesses as all properties are strategically located near local tourist spots and essential establishments, such as supermarkets, medical and dental facilities, academic institutions, and public transportation.
Complementing our condo units provisions are communal amenities that provide further convenience to homeownership. Among these amenities are a multipurpose court, clubhouse, play area, jogging paths, swimming pool, guarded entrances, and 24/7 security.
Fulfill your investment goals this year and get the condo in Philippines to earn passive income through Asterra!
