If you’re thinking of becoming a landlord in order to improve your financial status, don’t get too far ahead of yourself. What sounds simple can be quite overwhelming and difficult. From vacancies, upkeep, and unruly tenants to refinancing hassles and more, being a landlord is hard. Before jumping in with both feet, read over the following list to help prepare for the task at hand.
1. The Right Approach
Real estate investment is a business. You need to approach it as such and devote as much time and energy to it as possible. Even if you’re only planning to have one rental property, it deserves your undivided attention. Should you decide to expand your investment business, you’ll need to devote even more time to attending open houses, researching neighborhoods, monitoring your financial state, and estimating costs in order to find good deals with high return on investment.
2. Dealing With Hassles
Being responsible for a rental property can be challenging, especially when tenants aren’t happy, or things need fixing. You can maintain a cordial relationship with your tenants by being discerning and smart.
Avoid potential issues by building a network of reputable contractors you can count on when repairs are necessary. Furthermore, create a schedule for paying bills, insurance, and other expenses so you do so on time, and be sure to keep an emergency fund at the ready for unexpected expenses.
It’s much easier to manage a rental property that’s close by than one that’s in another town or state. If you’re very resourceful, you can pull it off, but problems of any kind can arise without warning, and being close to the problem makes it much easier and cheaper to solve.
4. Finding Good Tenants
One of the most challenging aspects of being a landlord is finding good tenants. It pays to do your due diligence when screening prospective renters. Do criminal background and credit checks and speak with previous landlords if possible.
Renting to the wrong tenant can end up costing you big in terms of time and money. Should you need to start eviction proceedings, it will be impossible to rent your unit out again until they are finished, which could be several months.
Furthermore, should your tenants be unhappy with your services or feel slighted in any way, they could take it out on your property, costing you way more in repairs than they’ve paid with their security deposit.
Moral of the story? Don’t take shortcuts when screening potential renters.
While the idea of making money being a landlord sounds easy, the reality is, it’s quite challenging. If you’re thinking of becoming a landlord, be sure to consider the four points above so you’re prepared.