Folsom Property Management Blog

A Small Investment Can Get You Started as a Landlord

A Small Investment Can Get You Started as a Landlord

Real estate investing can be an intimidating area for someone new to the industry to enter. 

Luckily for you, it does not take as much money as you might think to become a landlord. The minimum investment for a real estate investment trust is about $1,000

What does it take to get involved with property management? How do you have the right investment level to become a landlord? 

This is your guide to investing in real estate. 

Managing the Down Payment 

The first thing that you need to do as a real estate investor is to come up with the money for a down payment. A down payment is the initial amount of money that you would pay for a piece of property. 

Typical down payments can be as high as 20% if you need a full mortgage package or a specific type of loan. However, the rules are a little different for those that have the financial means and are looking at property as a business rather than their home. 

With a conventional mortgage, you could go as low as 3% of the property value on the down payment. 

To put that into dollars, let's say that you are looking to buy a property that costs $500,000. Rather than having to put down about $100,000 at one time, you can get away with only putting down $15,000 to start using your property. 

This can put a lot less pressure on you as a new investor to have upfront funds for your new property. It allows you more financial flexibility and potentially more time to start renting and/or leasing out your property to other tenants.

Filling the Property

Next, you have to think about how you are going to fill your property and make money from it. This specifically applies to two areas. Those areas are getting tenants and getting staff. 

You will need at least a small staff to manage any problems that may occur on your property. This can include a maintenance person, a maid, a receptionist, security, and maybe even a property manager. These positions will help take care of the daily needs of the property and stay on top of any potential problems. 

As for getting tenants, that speaks for itself because it affects how much passive income you are getting every month. 

Let's say that you have 10 rooms available for tenants to take and you need to fill at least four of them every month to break even.

You will need to make sure your building is appealing for tenants and be heavily aware of how much your property is worth in the rental market. This is especially the case in California where property value is significantly higher than most of the country. 

Become a Landlord 

These are just two of the things that you need to keep in mind when investing to become a landlord. Make sure you know how much money you will need for a down payment and have a plan of attack for getting that property filled. 

Do you need help on your landlord journey? Find the equity management group for you today.