Are you interested in taking the plunge and becoming a first-time landlord? You’re not alone! Investing in real estate is one of the best ways to cultivate wealth. That said, there are many factors to consider before making the decision to own and rent out property. Let’s get to it!
Run The Numbers
Like any investment decision, you need to do your homework before leaping into this opportunity. Real estate can be incredibly lucrative when done well. Likewise, it can be a complete disaster if you make an unfortunate mistake.
Factors to consider include:
- Property taxes
- Renovations and repairs
- Insurance costs
- Down payments
- HOA fees as applicable
You need to make sure that you can calculate your anticipated expenses. This will help you charge an appropriate rent to your tenants. To better assist, you can use one of the following real estate investment calculators.
Choose Optimal Tenants
However, you should obtain as much information as possible. This includes acquiring references, checking pay stubs and income, and asking plenty of questions about your tenants’ previous rental history.
Finally, even though someone may look great on paper, it’s best to listen to your intuition. If you get a bad vibe from someone, pay attention!
Maintain A Set of Standards
Like any business owner, it’s imperative that you define your boundaries and parameters for work. After all, you’re the boss.
As a rule of thumb, create and maintain a written policy and go over it with each of your tenants. You can always refer back to this policy when tenants (inevitably) ask you a question or raise a concern.
Be Willing To DIY
The more you’re able to handle repair projects around the home, the more money you’ll save as a landlord.
It’s easier to maintain a rental property when you don’t have to outsource every small issue to the professionals.
You need to be flexible with your tenants and their needs. Some of them will unavoidably call you in the wee hours of the night with a crisis on their hands.
Be Willing To Outsource When Needed
Even though taking on a DIY-approach can and will save you money, you also need to obtain the right professional help.
This often includes having a team that consists of a real estate lawyer and accountant. Additionally, you’ll want to have references for local plumbers, electricians, and contractors available to help.
Finally, if you’re completely against the DIY approach, you can always use a property management company. This can be a great option if you have multiple properties or if you don’t live close enough to the location.
Final Thoughts On Becoming a First Time Landlord
Being a first-time landlord can be both exciting and terrifying! While it’s certainly not for everybody, it can be a fantastic way to grow your wealth.
Are you interested in learning more about what to include in your rental agreement? Check out this article today.