Being a landlord seems like the sweetest gig in the world, doesn’t it? What’s sweeter than sitting home and watching house rent roll in from multiple tenants every month or every few months?
Being a landlord is not all it is painted up to be, though. It is a serious commitment and a lot of hard work. You might want to pause for a second and do your homework before shelling out cash to buy or erect a building.
To be a successful landlord, you need to be familiar with your legal responsibilities and right. On a personal level, you need be able to tolerate many different personality types and be adaptable to impromptu problems.
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: How big is your pool of potential renters and what is their economic muscle? The answers to these questions are determined by factors such as the jobs available in the area and even the lack of jobs. You probably want to erect a residential building in a student-‐heavy area because students at higher institutions constitute a rich renting pool. Similarly, a business district is a great place to rent out office space. It’s all about demand and supply.
- Establish A Network Of Blue Collar Professionals: You will be well served to build a network of artisans including electricians, plumbers and carpenters who you can call on whenever you need maintenance services. Find people who are competent and who you can trust with your precious investment. Introduce them to your tenants and encourage your tenants to patronize them also.
- Screen potential tenants: You have surely heard stories of nightmare tenants who are loud, destructive, violent and who regularly default on their rent. To avoid these types on tenants, ask for references from employers and former landlords of potential tenants. Be thorough when you interview prospective tenants to find out if they meet your requirements. To be safe, 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, expedite the lease signing process. Always keep in mind that you’re running a business and your tenant is a customer.
- 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, 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 for unexpected repairs well. Subject to the condition of the lease agreement, landlords can be responsible for some property maintenance.
These repairs could include things like refreshing a chipped coat of paint, fixing a broken toilet, a leaking roof or a clogged kitchen sink.
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.
- Run the numbers. Being a landlord can be profitable, but you can easily lose money as well. If you charge too high for rent, you’ll scare away potential renters, and if you charge too low, you’ll shortchange yourself and possibly run into debt.
Factor in all of your costs, such as your mortgage payments, insurance payments, maintenance costs, and the valuable amount of the time you’ll spend putting everything in place, then figure out how much you should charge to make a profit.
Being a landlord is a dream for a lot people, but it is not something to dive into blindly. As much as you crave the privileges, you need to be aware of the accompanying responsibilities.
