The residential rental market is a fast-growing sub-sector of the real estate industry. If you’re someone who wants to enter the industry for the first time, this is one of the safest markets to enter, given that you know it. In this article, we will look into how you can start a business in the residential rental sector and how you can make it successful in just a couple of years. But first, let’s look into why it’s such a fast-growing market.
One of the main reasons the market is growing so fast is the increased home prices in the United States. In major metropolitan areas, home prices have increased by a staggering 18%. The general increase is recorded to be around 13% to 15%. Those are the most considerable price increase that the industry has ever received.
Experts are urging home buyers to rent a home instead of purchasing one during the pandemic. The main reason for this is that prices might return to normal once more access to workers and materials. This is why many are opting to rent a place to stay right now until home prices get back to normal. So how can you start a business in this sector?
The easiest way to start your residential rental business is by getting a business mortgage and purchase a property like an apartment complex. Essentially, you’re going to be using it for commercial purposes, so it wouldn’t make it illegal to operate your business mortgage for that. What makes it illegal is when you and your family start living inside the complex as well.
If you have the cash to start, this is the best option for you. Other options include getting investors to your business, but that means diluting your share. You can also choose to purchase it with your own money, but that’s a considerable risk you’ll have to take.
Another option you can do is to use your business mortgage to purchase old homes, flip them, and rent them at a much higher price. When flipping a home, make sure you have the proper knowledge, skills, and patience because if you don’t have these things, it’s better to leave the job to a contractor. Sure, it’s going to cost you more money, but at least they know what they’re doing.
Now that you have two options in starting a residential rental business, it’s time to delve into the things that’ll make your business successful.
A clean property will get the most clients. Offer cleaning services to your clients once a week or a couple of times a month to ensure that you get on their good side. It’s also one way you can keep an eye out on your properties for damages caused by your tenants. Finally, it’s a sneaky way to tell which tenants are good and which ones are not.
If you can do the clean-up yourself, then much better. You can even expand and develop this into a separate business to bolster your cash flow. Many reputable cleaning services offer commercial cleaning service franchises so you can stake a claim in the commercial cleaning industry, on top of your sizeable real estate investment. These experts teach you what you need to do if you want your properties to be squeaky clean and your tenants happy.
You can take a page directly out of WeWork’s book and know that digital marketing is the future of the real estate rental industry. If you want your business to succeed, consider building a website or investing in digital ads to let people know about your properties and your business. Most companies in this sector thrive because, technically, they no longer need to spend any money on customer acquisition.
Build a Community
Lastly, you must build a community behind your properties. Community is everything for many potential clients. Unfortunately, many clients are willing to turn down cheap rent because the community isn’t as safe or engaging.
Building a community is a separate article, but making robust programs that bring people together matters. Parties or dinners are always a great way to bring your tenants together. You can do this once a week. Your tenants can also suggest fun activities that will bring them closer to one another.
So here are some great ideas for starting a residential rental business and how you can make it successful in the future. First, you must capitalize on the renting boom right now in the United States so you can get as many tenants as possible. Once you take advantage of this growing need, you can let your business grow without a need for high business capital.