Renters occupy many households around the world and this is why becoming a landlord is a highly effective strategy for generating a secure monthly income. Apart from the fact that rental properties appreciate over time, they also help finance existing properties and grant tax advantages. In becoming a landlord and leasing your property for the first time, you need to understand some basics. Knowing how to project your return on investment and budgeting for affordable homeowners insurance will help you prepare for the management of your property. Let us look at some tips to guide prospective first-time landlords.
Choose a good location for your property
It is no longer news that the location of any business you are going into is very important to the success of that business. It is no different in the case of owning a property for the purpose of leasing. Property location is known to be the single biggest driver of a successful rental and if you are going to be a first-time landlord, you really need to consider where you will be situated to be able to achieve success. Renter-value amenities like proximity to public transportation, parks, good hospitals and schools, and walkable neighborhoods are important to renters. In addition to these, you should choose communities with solid growth in employment rates with many good employers nearby.
Fortify yourself against potential legal issues
There are many legal issues that a landlord could be faced with in the course of doing the renting business. The most common ones involve security deposits, nonpayment of rents, and evictions. So, it is important to set plans ahead for an attorney to thoroughly check through your leasing documents and put everything in writing to have adequate insurance coverage. All rules of maintaining a property and the local landlord-tenant laws should be known to both parties. If you don’t know how to go about this, you can employ the services of any good property management company online to help you regulate your leasing documents.
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Set the right rent price
This is where some first-time landlords get things very wrong. They are so excited about being landlords and quick to start making their returns that they slap their properties with heavy rentage. You need to beware of the risks involved because there is a tendency you would scare off potential tenants. The result of this is waiting for very long even after reducing your rent before you start receiving suitors. Setting the perfect rent price is very important in the initial stages. Yes, you do not want to miss out on rental income, but you shouldn’t be greedy also. Renters usually have many options in a competitive market so they are never willing to overpay. Your rent has to be reasonable to possible tenants. Your rent should just be high enough that your mortgage and other expenses are covered and you still get to make profits.
Create and follow a tenant screening process
There are so many reasons for screening tenants thoroughly before leasing your property to them. This crucial exercise is often overlooked by landlords and as a first-time landlord, you can set things off on the right path by making sure your screen your prospective tenants. A thorough screening process will guarantee that the eventual tenants are reliable and suitable for the tenancy. You really need to steer clear off bad tenants because there is no limit to the pain that they could cause the landlord. Even if you are able to get them evicted, they may have caused a lot of damage. Bad tenants could even make you lose all your other good tenants.
If you are considering becoming a landlord, you should read these tips and do more research online for more guidance. Owning a property for leasing is good business and definitely a good investment. It is however good to know how to handle it and not just jump onto it blindly. It is not a good experience to have bad tenants or situate your property in a bad location. If you do things right from the beginning, you would enjoy your investment to the fullest.
Source: Multifamily Insiders