People invest in rental houses for a number of reasons, but the most popular motive is because they want to make money. Not only do they want to make money, they hope to do it in a relatively painless way with a quick turnaround on profit. Depending on your approach to rental houses, a quick profit may easily become a reality. But before you start recruiting tenants, make sure you’re ready for solid financial commitment. Follow these six basic steps to invest in rental houses for profit:

Step 1:  Set a realistic financial goal

Before you make any progress in managing rental houses, you need to set a financial goal. More importantly, your financial goal needs to be tied to a personal goal. This is because it’s easy to cite a dollar amount as a goal, such as “a million dollars”, but it’s less clear whether that amount will bring you what you really want. So think about your life goals – do you hope to retire early?  Do you want to put your children through college?  Do you want to afford lavish vacations?  Start by contemplating your personal life goals and then construct your financial goals around those personal goals.

Step 2:  Secure money for down payments

Even if you have a low income, it’s possible to get multiple home loans. The secret lies in making sure you are not seen as a high risk to a lending agency. The quickest way to do this is to keep your credit record in good shape and to make sure your credit score is as high as possible. This means paying your bills on time and keeping your debt load low. When you’re ready to start out with your first couple rental houses, it’s also wise to have a steady source of income – or at least have a cosigner with a steady source of income. Whatever you do, don’t be tempted to do “creative financing” in order to buy your rental houses. Be upfront and honest about your financial profile.

Step 3:  Know how to buy a good property

Become acquainted with the basics of housing standards and building codes. You’ll want to be able to survey a potential property yourself to decide whether it’ll be a good investment. To be sure, it’s still wise to use professional building inspectors for a thorough assessment of the strengths and weaknesses of a home, but you need to be able to understand the jargon and the implications of building standards. You should also become familiar with real estate values in the areas where you’re considering purchasing rental houses. Get acquainted with the preferred areas to live, such as the neighborhoods with the best schools or areas near public transportation.

Step 4:  Land a stable loan at a low interest rate

The surest way to lose money on rental houses is with a bogus loan that has a high interest rate. Do your homework when shopping for lenders. Ask friends and coworkers for referrals to trustworthy lenders. Seek out at least three estimates and compare rates. Don’t jump at the first offer you get for a loan – be patient and persevering before you sign on any dotted line.

Step 5:  Create straightforward paperwork

Whether you plan to be the landlord for your rental houses or you plan to contract the work out, you need to be straightforward in all rental agreements. Make sure the paperwork you want your renters to sign is clear and concise. Cover every aspect of care for your rental houses, from what kinds of nails are acceptable in the walls to what kinds of yard standards you’ll expect. Clearly layout your stipulations for payment deadlines and how you’d like payments to be delivered. Be clear about repercussions for late payments. Ensure your tenants have clear contact information should they have questions or problems with a rental property.

Here’s one more tip when it comes to payment:  Make it easy for your tenants to pay you. Do this, and you’re more likely to be paid in full and on time. For example, it may be hard on a tenant if you demand payment in cash delivered in person. Instead, consider giving your tenant pre-printed bank slips so they can deposit payment directly to your bank (this saves you the hassle of having to make a bank stop as well). If your tenants are tech-savvy, allow online bank transfers through PayPal. Remember that the most important thing is that you get paid, so offer plenty of options to ensure that happens.

Step 6:  Be ethical as you proceed

The number one rule to being a successful owner of rental houses is that you proceed as ethically as possible. Be a stickler for safety standards when it comes to your rental houses. Conduct credit checks on potential tenants and approve or deny them based on the outcome of those checks. Don’t let favoritism or bias cloud your judgment when selecting lenders, tenants, or contracted landlords. Even though it may sound cliché, “treat others as you’d like to be treated”. Do this, and you’re sure to enjoy financial success in the business of rental houses.