Thinking of being a Landlord soon?
Then you’re thinking of making a smart move.
Becoming a Landlord is an attractive venture as you get to make lots of cool cash. Say you purchase a property, rent to tenants and then the rent money begins to roll into your wallet – cool right?
Not so fast, you need to take the time to do your homework about what it will entail before you plunge in because being a Landlord requires more than just collecting monthly rent. It requires a lot of time and research – from acquiring the right property to finding a reliable tenant.
Besides, to be successful as a landlord, you need to understand the importance of being familiar the law, be able to tolerate many different personality types and be adaptable to impromptu problems that can occur at any time of the day.
Here are 7 important things you need to know before becoming a Landlord
- Inspect the property before Purchase
One of the important things to consider before you become a landlord is to thoroughly inspect the property you intend to purchase and note down what will need to be repaired or replaced. Say, you might want to change the toilets to the latest designs, and as well do the same to things like water, door locks, and flooring.
Most times, landlords are responsible for insurance and taxes, and not to talk of expenses like garbage, gardening, and regular maintenance.
So one thing you don’t want to do is to make the mistake of underestimating the costs of fixing and maintaining the property before a tenant has moved in – and even after moving in.
- Choose your location carefully
Before choosing a location to invest a property in, consider the economic factor for that area.
For instance, an area that has no unemployment opportunities is a sign that the pool of renters won’t be much and you may be forced to charge lesser rent. Instead, check areas that are booming with employment opportunities and a growing influx of people.
Also, areas, where higher institutions are located, can offer a great pool of renters.
- Be hands-on with managing your rental
Advisably, you will need to build a relationship network of professionals including electricians, plumbers, carpenters, and more. That way, it’s easier to fix most domestic problems like a leaky roof with a simple phone call.
On a plus side, it will save you more precious time and a list of reliable handy professionals you can call on anytime, instead of having to scout for one.
When it comes to being a landlord, make sure your ship is ready before you set sail.
- Screen potential tenants
We are sure you have read terrifying complaints of tenants who constantly pollute with noise, cause damage to property and even stop paying rent.
To avoid being in this same shoe, ask for references from employers and former landlords from potential tenants.
When it comes to scouting for the tenant, don’t be too nonchalant about interviewing prospective tenants to find out if they meet your requirements. To be safer, confirm the source and amount of their income just to be sure they can keep up with rent payment.
Once you land yourself a great tenant, don’t stall to get the lease signed. Nonetheless, keep in mind that you’re running a business and your tenant is a customer. You know they say customers are always right, so treat your customer right.
- It Is Very Rewarding Work
Sure, being a landlord comes with a lot of head-rattling and struggles, but it also has great rewards attached to it, in terms of monetary value.
There is also this feeling of personal freedom that comes from being your own boss, and pride that comes from seeing the financial rewards of your own hard work.
Asides that, you being able to provide a home for another being is an accomplishment in itself.
More so, forging personal relationships with your tenants is inevitable, especially if you share the same building – you will experience tenants come and go, and watch their children grow, but you can also take pride in the fact that your property has served as a home for all these people, and will probably do so for years to come.
- Budgeting for repairs is a good idea.
Expecting the unexpected comes with the responsibility of being a landlord, and that’s why you should be prepared to set aside some money and budget for unexpected repairs well. Subject to the condition of the lease agreement, landlords can be responsible for quite a number of property maintenance.
This could range from anything like refreshing a chipped coat of paint, fixing a broken toilet, a leaking roof to a clogged kitchen sink.
If you can’t figure out the amount you need to set aside, begin a percentage of the total value of your annual rental property. Howbeit, situations may arise where you need to adjust this amount to suit your specific needs.
On the other hand, to avoid unexpected repair costs, you can take a proactive approach by doing whatever you can to prevent problems from arising in the future.
The importance of thing is to keep the property in good condition for future tenants or buyers.
- Run the numbers.
Even though being a landlord can get you lots of financial gains, you should also keep in mind that being a landlord is similar to you running a business.
Therefore, you should factor in all of your costs, such as your mortgage payment, insurance, repairs, and the valuable amount of the time you’ll spend putting everything in place.
After that, compare similar rental properties to give you a clearer perspective on the amount of monthly return you can reasonably expect and then confirm if the price you are charging is worth it.
Compared to other savings options, owning a rental property offers much more return on investment. Also, it’s a great stream of a kind passive income, but not without it requiring some hard work.
Since people are looking for ways to make their money do more for them, investing in a rental property isn’t such a bad idea.