While being a landlord can be lucrative and satisfying if done well, it isn’t for everybody. New landlords should possess essential qualities and information to increase their chances for profits, success and a positive overall experience.
The following are four essential things new landlords should know:
1. Numbers Count
First and foremost, one should determine if being a landlord is in the best interests of their financial future. Startup costs are mainly about procuring a property or properties to rent, of course, and a mortgage payment will factor prominently in the math. New landlords must evaluate the chosen area and rental market and decide what kind of rent amounts and return on investment are possible. Repairs, maintenance, marketing, property taxes and other relevant costs should be factored in.
2. Becoming a New Landlord Means Running a Business
While renting to reliable, high-quality tenants in well-maintained properties can result in cash flow that feels like passive income, those considering this path should know that being a landlord is far from a passive activity. Persons who become new landlords should have entrepreneurial characteristics like discipline and big-picture thinking. They should also be skilled at DIY household projects and/or be prepared to outsource what they prefer not to do themselves. Being organized and keeping good records is important as well.
3. Outsourcing Can Lower Stress
New landlords should also know that they don’t have to go it alone. Many aspects of being a landlord can be outsourced, from repairs to maintenance to all the details of managing the property. Tenant screening may also be outsourced.
4. Rental Applicants Should Be Screened Thoroughly
Lastly, one of the key ways to help guarantee a positive experience for new landlords is by screening potential tenants before making final decisions. Tenant screening should involve asking applicants for permission to contact their employer, past landlords and references that they provide.
Applicants should be screened for state eviction records, criminal background records and their credit history at a minimum. Hiring a professional tenant screening service to take care of this important step can ensure that it is done thoroughly and in compliance with state and federal laws.
Being a new landlord can be lucrative and highly satisfying, but only if it is done with a keen business sense. Those considering becoming a new landlord should be aware of these four tips to maximize their odds for success.