While owning rental real estate can allow you to build wealth and generate income, it can also be an expensive endeavor if you go into it without being aware of the costs, potential risks, and income opportunities.

Therefore, if you are just starting out, it is important that you have an in-depth understanding of a wide range of possible scenarios. With that in mind, three essential tips that can increase your chances of success in residential rental real estate include:

  • Knowing the potential costs. When entering into any type of investment-related transaction, you should always be mindful of “the numbers.” This is particularly the case with real estate, as this type of investing goes way beyond just the initial purchase price. Because of that, make sure that you factor in all of your costs, such as insurance, maintenance, and possible emergency repairs. Then, include more as a “cushion.”
  • Protecting yourself legally and financially. Real estate investors are often seen as having “deep pockets” – even when just starting out. This could make you a prime target for a lawsuit. Given that, you should consider putting protection in place for yourself. One strategy is to keep an ample amount of insurance on your property(ies). You may also consider setting up a Limited Liability Company (LLC) for each of the properties that you own. That way, if you do become party to a lawsuit, the other party cannot obtain your personal assets.
  • Coming up with the terms of your lease(s). A rental property lease is considered a legal contract. So, it is vital that you cover everything. In addition to the amount of rent and time frame, some other areas to cover should include pets (whether or not you allow them, and if so, under what stipulations), security deposit, and activities that are and are not allowed on the premises.

Because there are many “moving parts” involved in rental real estate investing, you may want to bring an experienced property manager on board who can help you to navigate through the process.

If you own residential rental property in Orlando and/or the surrounding Central Florida area, give CFL Property Management a call and talk with one of our representatives about how our team could work well for you.