Becoming a landlord or landlady can be a profitable investment, so long as you understand the risks involved and commitment needed from the start. However, it is not as simple as just sitting back and watching the rent checks roll in; landlords need to stay on track of maintenance costs, carry out emergency repairs and maintain positive relationships with the tenants.
If you are considering investing in property, it is important to evaluate the situation first to ensure that you are prepared for what lies ahead. According to the National Multifamily Housing Council, 37% of US households rent their homes, so there is a huge market to tap into if you plan everything correctly. Here are some of the most important things to consider when becoming a landlord or landlady.
Do You Have the Temperament?
One of the main mistakes that landlords often make is being too nice. In order to be a successful landlord, there are times when you will need to be ruthless. If a tenant is late with the rent once in a blue moon then it will not do any harm to show them a little bit of leniency. However, if a tenant is constantly asking for an extension on the rent then it may actually do more harm than good to remain accepting because this can set a bad precedent that could make it more difficult to reclaim the money or evict them later down the line.
Do You Know the Rental Laws?
It is very important to study the federal, state and local rental regulations and laws prior to becoming a landlord. There are certain standards of living that your tenants are entitled to and is vital that you aware of the specifics, in order to avoid any unwanted and expensive legal action. For example, if a tenant of yours were to lose their sight, you would be required by federal law to allow them to keep a guide dog, even if you had previously specified that no pets were allowed in the property.
Do You Have the Time?
The income from a rental property can help supplement your salary or boost your savings, but you can’t be there all the time. There will be times when you are busy with work or away on a family vacation, and when problems occur regarding your rental properties, sometimes these can be both troublesome and expensive. Some repairs, such as a broken toilet, need to be dealt with right away. For peace of mind, many landlords hire residential property managers to carry out inspections and ensure that tenants’ needs are met. Utilizing many years of experience in the industry and sophisticated software solutions like ISN, residential property managers can help you focus on your work and family while keeping your rental property in top condition. It is estimated that the investment of hiring a residential property manager is usually repaid within 18 months.
Do You Know How to Delegate?
Landlords have to keep their rental properties habitable and safe. It can sometimes be tempting to attempt a maintenance job yourself, in a bid to save money. However, it is often more sensible to delegate the work to a professional, as a mistake could prove costly. Some tasks even require licensed specialists, such as electricians, to carry them out by law.
Do You Know How Much to Charge in Rent?
As a landlord, you need to survey the local market to get an idea of how much the going rental rates currently are for properties and whether they are similar to your own. If you set it too cheap, you will lose out on income. Set it too high, and you could struggle to find a tenant, which risks losing even more income. It is a good idea to set the rent at least 20% above the cost of the mortgage, as this will leave you with some funds to carry out future maintenance.
Do You Know How to Find the Perfect Tenant?
Speaking to real estate agents, posting adverts on Craigslist and putting up physical ‘For Rent’ signs are the main routes that landlords and landladies use to find tenants. However, if you struggle to find an appropriate renter through these traditional channels there are other options. Depending on the type of rental property you own and the location, there are a number of different outlets that could help you find a suitable tenant. For example, if your property is located in a college town it could be a good idea to contact the university’s housing office to get your property listed with them. Another option is to talk with medical facilities in your area, as hospital staff are sometimes given residential placements as part of their employment.