Are you interested in the real estate business, but you want a consistent stream of income? If so, becoming a landlord may be a great job to consider. Unlike flipping houses, which results in one single payday, a landlord makes money each and every month that tenants pay rent.
This means that rent can help you cover mortgage costs, making it a bit easier to start out as a landlord, since you don’t need as much money up front like you would if you were flipping houses. Here are five smart moves to keep in mind when you’re first getting started.
Set a budget for buying property
Buying a good rental property is key to your success as a landlord. When scoping out potential homes or apartment buildings to invest in, make sure that you know what your budget is, so that you can make an informed decision.
If you apply for a home loan online, you can get a good feel for what your bank is willing to loan you, which will help you narrow down your property search. From there, consider what your monthly mortgage will be, and also take a look at what other rentals are valued at in the area.
This will help you run some simple math to make sure that the rent you take in can be set at a fair price, cover all of your new home’s expenses, and still allow you to make a profit.
Brush up on local rental laws
Just like starting any business, it’s always a good idea to know what laws your state and city has that apply to your new role as a landlord. For example, Vermont is a far more renter friendly state, whereas states in the south and midwest favor landlords.
This doesn’t mean that you shouldn’t become a landlord if you live in a renter-friendly state, though. It only means that you should be extra informed when it comes to landlord-tenant laws, so that you can avoid any potential legal issues.
Attract good tenants
Of course, if you attract good tenants, your legal issues should be negligible. One way to attract good tenants is to properly screen them before renting to them. A simple online rental application can be worth its weight in gold when it comes to finding top-quality tenants.
Many websites even offer specific questionnaires that help screen out tenants whose needs aren’t a good fit for your property. So if you’re looking to only rent to someone who doesn’t own pets or is looking to rent month-to-month, you can be sure to get that information upfront and avoid any unnecessary work screening those applicants out yourself.
Maintain the property well
Once you have good renters, the best way to keep your business running is to keep them happy. This means maintaining the property well and responding to maintenance requests in a timely manner.
Remember that these are the sorts of benefits renters are seeking when deciding to rent rather than buy. If you maintain the property well, and even go the extra mile by providing some nice landscaping or keeping the paint fresh in common areas like entryways, it goes a long way in keeping tenants.
Only expand once you feel confident
Once you’ve started to get the hang of being a landlord, you may be tempted to start expanding to other rental properties. While this can be incredibly lucrative, it’s important that you keep in mind how buying another property will split your focus.
It’s smart to wait a few years before expanding your business, because then you will have more confidence in managing your properties. There may come a time where it’s simpler to even hire a property management company to handle your real estate, but when you’re just starting out, it’s best to start small and scale slowly.
Becoming a landlord can be a lucrative and fulfilling job, if you’re the right fit for the work. By attracting great tenants, doing your homework, and working hard, you’ll be able to create a steady stream of income and help others have a great place to live, too.