If you are looking for a new investment opportunity, consider investing in a rental property. Typically, a rental property appreciates in value over time and provides you with a steady source of income—ideal for anyone looking to retire from their standard Monday to Friday career.
Guide to Being a Landlord
Of course, becoming a landlord is not exactly easy and requires a great deal of work and a lot of time. Consider the facets of this career before taking the plunge into the world of real estate.
Being a Landlord is Seriously Hard Work
If you’re looking for something that requires very little effort, becoming a landlord may not be the right avenue. You are responsible for anything andeverything that happens to and within your rental property.
Having great tenants and money come in every month is great, but it probably won’t happen steadily for a little while, so you need to have a good amount of funds set aside at the beginning. You’ll need to account for mortgage payments, home insurance and property taxes, as well as any third-party assistance you may require. There are also maintenance costs such as repairs, garbage collection, gardening, and plumbing costs. Don’t forget to consider the cost of vacancy and turnover; when someone moves out, you have to do a total overhaul of the unit, meaning you’ll be missing out on rent until you fill the space with a new tenant.
Start Out Small
You might think that your business plan is bulletproof (and you better have a business plan, by the way!), but choosing an entire apartment complex as your very first venture into being a landlord is not a wise move.It’s almost always better to start small, maybe with a single-unit home, and gather additional properties as you progress.
Be Selective with Location
One of the biggest mistakes you can make: investing in a rental property from out-of-state, never having actually experienced the neighborhood or seen the building. Unless you want to get stuck owning something that isn’t actually up-to-code or is located in a crime-ridden neighborhood, do thorough research into every area you’re considering.Alwaystake several trips to see the area and building in person.
Realize That You Don’t Know Everything—and Ask for Help!
You should always be willing to seek advice from other professionals, like realtors, lawyers and property management companies. Oftentimes, rental property owners will hire property managers to help them deal with the day-to-day details, such as maintenance requests and rent, so do not be afraid to seek some professional help when needed.
Think About Your Tenants
The quality of your tenants plays a vital role in success. Finding good people to rent your units (and keeping them) is one of the most important things you can do to ensure a profitable real estate investment.It’s crucial that you pay attention to what is expected from modern rental units. For instance, if you’re asking for peak rental prices, but still have outdated carpets in the unit, good luck finding a tenant to sign your lease. Once you’ve attracted a cache of prospective tenants, do your due diligence in screening. Use a company like MySmartMove to run a detailed renter credit check for landlords to ensure your prospective tenant can keep up with rent payments and stick to their commitments.
After placing a high-quality tenant, do all that you can to retain them. In the end, a lot can be said about common courtesy and attentiveness. A tenant is much more willing to put up with outdated fixtures if you are kind and understanding when they need a little leeway and always responsive to maintenance requests. Dealing with a vacancy is costly, so never take your tenants’ happiness for granted.
Investing in real estate can be a lucrative move. If you’re considering a career change and want to try your hand at the landlord game, keep these essential tips in mind as you get started.