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12 Things You’ll Wish You Knew Before Investing in a Rental Property

What to Know Before Investing in a Rental Property


Investing in a rental property is not just a trend that will come and go, especially in Antioch, California. In fact, in Antioch, 40% of the population are renters. Not to mention, the average market rent is $3,138 per month. Add in a mere 4.6% vacancy rate, and you can bet if you do things right, you’ll generate a hefty profit from a rental property if you get into the game right now.

Becoming a landlord is a viable way to earn passive income to fund everything from annual vacations to retirement. That said, if you’re ready to start investing now, there are some things you should know before you get started. After all, learning from the mistakes of others is one of the best ways to prevent making your own and hurting your chances of generating a profit.

So, let’s take a look at the top things you should know before investing in a rental property.


What You Need to Know Before Investing in a Rental Property

1. How Ready You Are to Be a Landlord

Few new investors realize the work it takes to be a landlord, especially in the beginning. If you decide to self-manage your rental, as opposed to hiring an experienced rental property management company to help, you can expect to put a lot of work in. For example, you’ll have to draft lease agreements and collect security deposits and rent. Plus, there’s performing repairs and even conducting routine inspections that will all be your responsibility.

If you’re not ready to take on all that work, start lining up professional rental property management in Antioch sooner than later so you’re prepared.

2. The Status of Your Finances

Finances for Antioch landlords does not end with simply collecting rent each month and making a profit. You’ll have to fund both the property you buy and the associated costs that come with owning a rental property. For example, you’ll have to pay for HOA fees, landscaping, homeowner’s insurance, real estate taxes, and of course, the mortgage.

Here are some helpful tips to follow before investing in a rental property:

  • Maintain a steady stream of income that can cover all the costs of owning a rental
  • Get rid of all the debt you can such as school loans and credit cards
  • Use a financial planner to help you devise a plan of action
  • Save up for a down payment, since most lenders will require at least 20% down
  • Find out how much a qualified rental property management company can influence your bottom line

Owning a rental property is like running a business. It’s important to have a solid handle on your finances both before and after you invest if you want to be successful.

3. Expected Rent Rate


The last thing you want to do is buy an investment property and later find out that you cannot garner the rent rate you expected. Just like understanding the state of your finances before you invest in a property, you should calculate an expected rent rate before buying too.

You should consider things like the location of your property, what similar properties in the area are going for, and the amenities your rental will provide tenants that will increase its value. Doing this will give you insight into what kind of profit you should generate from the property.

4. Where the Perfect Location Is

When you invest in a rental property, you want it to be in a desirable location. After all, people are not going to want to lease from you if your rental is in a bad part of town.

Here are the things you should look for when investing in a rental property:

  • Decent school districts
  • Low property taxes
  • Nearby parks
  • Restaurants, entertainment hotspots, and shopping centers
  • Low crime rates

The better the location, the better the pool of potential tenants that will show interest in your property. Plus, if your property is located in a great place, you can ask for higher rent rates, which means more money in your pocket.

5. The Damage Renters Can Do

It is never a landlord’s goal to place terrible tenants in their rental property. But it happens.

Sometimes, tenants can do a lot of damage to your property. And if you’re not expecting it (which you shouldn’t be) you could be in for a big surprise.

When tenants damage your rental, you not only have to deal with the tenants, but also the repairs, which can become very costly. Though you can’t prevent tenants from damaging your property altogether, you can be prepared. The best things you can do are perform thorough tenant screenings and have an emergency fund on hand.

6. That Interest Rates Can Be High

If you don’t have enough cash lying around to buy a rental property outright, you’ll have to finance it. With financing comes an interest rate that can really affect your annual profit as a landlord. Make sure to check your loan options before investing so that you get the best rate possible.

7. The Importance of Insurance


Protecting your investment property is crucial as a landlord. That’s why many landlords get homeowner’s insurance, which covers any structural damage to your property. However, you might consider landlord insurance too, which covers:

  • Property damage
  • Lost rental income
  • Liability protection

As a landlord, your property is your responsibility. Accidents happen, so it’s important to make sure you’re protected just in case.

8. You Should Require Renter’s Insurance

In addition to having homeowner’s insurance (and possibly landlord insurance), you should require any tenants leasing your property to have renter’s insurance. Renter’s insurance will cover the cost of your tenant’s personal belongings in the case of an emergency. Oftentimes, it will also cover costs related to displacement should your property become inhabitable.

Though your homeowner’s insurance likely covers displacement costs, it’s better to require your tenants to have the guaranteed coverage. In an emergency, you don’t want to deal with technicalities.

9. You Will Be a Boss

As a landlord, you will be the “boss” of your rental property business.

While you want to create good relationships with your tenants so they feel welcomed, you don’t want to become their friend. If you do, you run the risk of your tenants taking advantage of your kindness. This could lead to late rent payments and rule-breaking such as bringing in a pet despite the no pet policy.

If you’re worried about this, consider looking for rental property management in Antioch. With the right property manager on your side, you won’t have to worry about enforcing the rules.

10. Fixer-Uppers Can Be a Pain

Though it’s tempting to want to buy an investment property that needs some TLC, as a new investor it’s not advisable. With a fixer-upper, you’re going to have to invest a lot of money into renovations to make the property leasable. Unless you have an experienced team of contractors on hand and a lot of extra money to work with, you should probably avoid a fixer-upper and go straight for a property that is ready to go.

11. Low Cost Is Typically Better

Though we advise against buying a fixer-upper, it’s also important to know that a low-cost property is going to yield the most profit. If you buy the most expensive property in a neighborhood, you cannot always expect to get the highest ROI. That’s because potential tenants will know that the going rate for similar properties in the area are much lower and will refuse to pay what you’re asking. One way to get around this is to buy the lowest priced property in the neighborhood, make it nice, and take home all the profit.

12. There are Lots of Laws


If you have never been a landlord before, you may not be aware of the landlord-tenant laws that exist at the federal, state, and local levels. But they’re there, and you have to know them. If not, you run the risk of landing in court and losing big time. This is another instance where rental property management comes in handy.

Rather than hassle with all of the rules and regulations related to being a landlord, you can let a property manager deal with all that instead. This way you enjoy the benefits of being a property owner without the headaches that come with the legal side of things.


Final Thoughts

Do you need your Antioch, CA rental property leased or managed? If you’re on the verge of investing in your first rental property, or have recently purchased one, contact us today and see how we can help you.

At Blue Line Property Management, we take rental property management seriously. Our full-service property management services can handle everything from property maintenance to tenant screening, and rental collections to property inspections, so you have less to worry about, whether you’re a first-time investor or a seasoned pro with a growing portfolio.