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According to the US Department of Housing and Urban Development, more than 5 million people are renting properties.
Rentals have become more common as people struggle to buy a home. If you’re looking for ways to increase your income, you can buy a property and turn it into a money-maker. Becoming a landlord can help you save for the future and you don’t have to do it alone.
Continue reading to discover the best landlord tips and what to consider before buying your first property!
1. Who Will Manage the Properties?
One of the most critical factors to consider when becoming a landlord is who will manage the property.
First-time landlords often feel like they must be responsible for everything. Working with a rental company or partner can help you turn your property into a successful investment. Instead of tracking people down for rent payments or managing contractor work, you can focus on bigger-picture items.
Make sure you form a team of people you trust and oversee financial documents.
2. What Types of Contractors Will You Need?
Landlords aren’t expected to handle every issue that comes up, but they do need a strong network of contractors.
Before you start investing in rental properties, you want to have a few contractors lined up to handle repairs and emergencies. Try to find electricians, plumbers, and general maintenance workers to keep your building in good shape.
If you want to keep your properties in prime condition, you can also invest in cleaning services.
3. How Will Payments Be Received?
You don’t want tenants to sign their contracts without details about payments included.
It’s important to identify which days of the month you must receive rent payments. You need to clarify how much each will cost and the accepted forms of payment. Many experienced landlords also include terms related to late payments and eviction notices.
You’ll have to set up a business account at the bank after you set up your company. In many cases, banks will accept transfers through banking applications. Tenants must have this information before they commit to your property, otherwise, a legal issue may arise.
Have your lawyer review your contract and pay special attention to the payment section. A small error could cost you a part of your investment.
4. Which Properties Will Be Most Profitable?
The location of your property will decide how profitable you are.
Whether you’re buying apartments, homes, or commercial buildings, you want to ensure there is a need for them. If you buy a property without local demand, you’ll have to seek out applicants and could have vacant units.
Think about what areas are lacking housing, but also where the community can afford rent prices.
Before investing, do thorough research on the community. For example, if you want families to move into your rentals, you don’t want to be near gentleman’s clubs or busy highways. The location you invest in will play a big role in the types of tenants you attract.
Turn an investment real estate project into a retirement plan, but don’t forget to consider its location. Without the right spot, your investment could turn into a money-eater.
5. How Will Your Properties Get Financed?
Unless you’re prepared to buy the property in cash, you’ll need a financial plan for your rentals.
Many people apply for small business loans as first-time landlords. This will help you cover the cost of buying a building before you start getting rent payments. You can also use your loan to make repairs to the property or for payroll purposes.
If you don’t want to apply for a loan, you could network in your community and try to find an investor. Investors may form a partnership with you, but keep in mind that most of the money will go back to them. If you negotiate fair terms with a partner, however, this could be an easy way to afford rentals.
6. What Will Your Screening Process Look Like?
If you haven’t put much thought into your screening process, you need to do some research before accepting applications.
Although the application process can be long and tedious, it is worth it when you consider the problems you’re preventing. Accepting the wrong applicants could lead to legal issues, damage, and other problems that could result in a court hearing.
By asking the right questions, looking at financial info, and meeting applicants, you can put the best people in your properties. Not only do you need to ensure your tenants can afford your unit, but you want to be sure they aren’t messy or rude.
7. Is This the Right Path?
After you’ve compiled your research and discovered what it takes to become a landlord, you need to decide if it’s the right path.
Not everyone will feel fulfilled or happy managing rental properties, and you don’t want to discover this after spending money. Take time to soak in all the info and decide if you truly think you can make money and create the lifestyle you want while being a landlord.
To become a landlord, you’ll have to work around the clock and always be prepared for the unexpected.
Becoming a Landlord Can Improve Your Life
Choosing a career influences more than your wallet in the long run.
Becoming a landlord can help you build a fulfilling lifestyle that doesn’t involve daily commutes to an office. Investing in desirable properties, in high-demand areas, can help you give housing to people in the community and make money. Before you start signing or sharing contracts, you need to have a financial plan and consider the obstacles.
Make sure you read our blog for more content about buying property and finding your career path!
