It’s no secret that real estate can be an incredible investment, especially when you find the right property. But once you do secure the ideal condo, house, or semi-detached home, what comes next? For many new landlords, the process of turning a prime living space into a lucrative side business can seem a little overwhelming—but it doesn’t have to. With the right mindset and a few helpful tips, you can kickstart your career as a landlord.
Here are 5 Hot Tips For New Landlords
1) Make sure the rent is right
It goes without saying that you want to get the highest return possible on your investment. At the same, many new landlords make the mistake of asking for too much monthly rent—and turn tenants off as a result.
The number you choose should neither be too low nor too high. To make an informed decision about any given property, you need to have a strong sense of rents being charged for similar places in the immediate area. If possible, you may want to speak with local landlords to see how they arrived at the sum they’re charging.
2) Screen tenants carefully
We’ve all heard stories about nightmare tenants—but the truth is, they’re pretty rare. What’s a lot more common is renters who pay late, keep untidy spaces, and regularly break the rules.
Fortunately, there are steps you can take to help ensure that the tenant you want is the tenant you get. It’s all about having a screening system in place. Consider the ideal income to rent ratio (typically, their salary should be three times more than their monthly rent). Check references—including an employer and past landlord. Google them, and don’t be afraid to ask questions!
3) Set your rules
You can make your job as a landlord easier by setting reasonable rules and enforcing them consistently. From pet ownership to smoking, you’ll want to cover all your bases—and ensure your tenant understands your policies.
The truth is that at some point, you’ll have to enforce your rules. The earlier you start, the better. Holding off could weaken your position with your tenant by sending the message that it doesn’t matter. As a result, you may have to take stricter measures than you otherwise would (like threatening eviction).
4) Build your network
It’s never a bad idea to network with other landlords and learn how they make the logistics work. Having said that, it’s just as important to start building the team that will help you serve your tenants.
From plumbers to electricians to contractors, connecting with the right professionals is step one. Perform online research, read Google reviews, and be choosy about who you work with. When somebody does a good job for you, show them you’re grateful—and take steps to maintain your connection.
5) Consider a property manager
Many new investors underestimate how much time and energy it takes to prepare and maintain an income property. Finding the right place and engaging in investment planning is half the battle. From there, you’ll want to assess whether you have the bandwidth to do the job.
Are you available to respond to tenants at the drop of a hat? Can you take care of unexpected repairs and (in general) tackle problems whenever they arise? If there’s any doubt, you might want to consider hiring a qualified property manager.
Thinking about investing in real estate in the near future? Reach out to learn what’s happening in the market—and what it means for you.