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property. It pays to have a profes- sional on your side. I always have my property manager weigh in before I make any offers. They are a valuable part of my team. Use a local real estate agent who specializes in rental properties. They can tell you not only what is happening with property values and market rents in the area but also 6 things such as whether there is a moratorium prohibiting rentals in that subdivision, a limit on the number of unrelated persons in a property, or a limit on the number of pets a tenant/owner can have in a property in that area.

New property investors should not buy older homes that have been turned into multi-units

Research rental rates for the area. Just because the listing says you can get a certain rent doesn’t mean

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with all utilities included. These properties are often efficiencies or one-bedroom units with transient tenants. You will have sky-high turnover and sky-high utility bills. Plus, you can’t hold anyone respon- sible for leaving the junk sofa on the curb that you now have to pay to have disposed.

that’s what the rates actually are— verify the claim against market rents.

Know the local laws regarding “discrimina- tion based on income source” for things like Section 8 vouchers. Decide if student housing is right for you. You will have high turnover, higher costs to get the

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If you buy in a college town, have the parents co-sign. Always run prospective tenants’ credit and have a good way to score the rest of the application

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property ready to re-rent, and potential issues locally if the tenants like to party.

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Get the details from your lender before making the

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Have a good CPA. They can help save you a lot of money and understand the tax implications of the investment. Make sure you understand the local rental laws where you purchase property.

offer so you have the exact down payment number, as this will affect your rate of return.

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findings. Make sure the application is complete and all the steps have been followed—no cutting corners or exceptions. If you don’t have a lot of spare time or don’t enjoy tenant calls at 3 a.m. when their heat goes out during a Michigan winter, think about hiring a property manager. After 4 self-managing at first, I now buy my properties with the intent of having a professional property manager help me run my rental business.

Start slowly and learn from each property.

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9 Investing in real estate is not a way to earn “passive income.” It is a very time-consuming business, unless you use a property manager.

A professional property manag- er is a valuable part of any real estate investor’s team. Even if you self-manage your properties, you can learn from their experience to make the best investment and prop- erty management decisions before you buy your next property. •

Be cautious about purchasing rental properties with tenants in place. Ask for a tenant

Use a cashflow or deal analysis spreadsheet before writing your offer. My property manager has

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ledger. Ask for current photos or, better yet, inspect all units person- ally. Look up rental/tenant violations for the property historically. Drive by the property at multiple times of the day to see how the tenants maintain the property.

seen many out-of-area investors pay for inspections, only to walk on the deal once they find out what the local taxes will be after buying, the local cost of the rental licensing, and the true cost of rehabbing the

Jeff Roth has been a licensed realtor in Michigan for the past 15 years. He specializes in investment property in southeast Michigan. You can learn more about Roth’s practice at www.moregroupmi. com/staff/jeffroth and connect with him at jeffrothsells@gmail.com.

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