5 Tips for Investing in a Rental Property

July 1, 2022

It’s no surprise that rental prices are through the roof right now. According to a recent report by Relator.com, the median rent in the United States has increased 16.7% from last year. While this isn’t great for the renter, it is a huge opportunity for investors.

Many people are looking for ways to make passive income, with real estate being one of the top lucrative opportunities. But before diving into an investment, it’s important to know some of the basic elements.

Here are some helpful tips when deciding to invest in a rental property.

1. Know Your Responsibilities As A Landlord

Being a landlord isn’t as simple as collecting monthly rent. There are many responsibilities involved and laws that need to be followed.

In Texas, for instance, landlords are required to respond to repairs and maintenance requests within seven days. This drops to three days if it impacts heat, air conditioning, or drinking water.

To handle many of these legal concerns, new landlords will work with a property management company in Texas. They can assist with lease agreements, rent collection, and even the proper way to go about evictions.

2. Decide On The Property Type

There are multiple ways to go about investing in a rental property. Before you make any big moves, you need to have a clear goal in mind. This starts with deciding what type of rental property you want.

First-time investors are advised to stick with a property that has no more than two or three units. These are known as duplexes and triplexes. More seasoned investors may have additional income that will allow them to extend their reach toward larger apartment complexes.

But you also have the option of purchasing a home to rent out or using a property as a temporary vacation rental. Do your research on the different types to figure out which one would best suit your specific needs.

3. Remove Your Personal Debt

Investing in a rental property means you’re going to need to put a large sum of money down. You may need to sell your home quickly and downsize to an apartment before you’re able to start seeing a positive stream of income.

Start by going over your personal budget. Any additional debt you may have, such as medical bills, credit cards, or student loans, should be eliminated before diving into this type of investment.

4. Research The Location

Location is key when it comes to investing in a rental property. The worst thing you can do is purchase something in an area that is declining or where rent prices are less than what can help you gain a positive return.

Start by researching the potential areas you want to invest in. Learn about the demographics of the area, such as the rent range, median income, and education levels.

Other factors about the location can change the success of your rental property. School districts, access to local transportation, or even construction can make a positive or negative impact.

5. Don’t Expect To Make Money Right Away

When you decide to invest in a rental property, you’re becoming a business owner. You have to treat your investment as you would any other type of first-time business.

There are going to be unexpected costs along the way, repairs that need to be made, and a duration of vacancy where the initial costs rest on your shoulders.

Don’t expect to make money right away from your investment. You need to be patient as it takes time to start seeing a positive stream of income. When doing your initial budget, make sure you take these factors into account.


When you decide to take the plunge into investing in rental properties, research is the most important thing you can do. Start networking with other investors who have the experience to guide you. Learn about the areas you want to invest in.

Understand the rights of tenants and laws landlords need to abide by in your state. Get a better understanding of the finances involved with the process. The more you know and plan ahead, the more successful your property will be.


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