How To Landlord Like A Pro

agent checking papersIf you’re thinking about becoming a landlord, income undoubtedly is a motivator in making that decision.

Every month (providing your tenants pay on time, of course), you should receive enough of a payment from your tenant to cover the mortgage outstanding on the property and expenses, allowing you to hold onto the property while it appreciates in value over time.

Tax deductions, long-term security, and the flexibility of managing an investment are other incentives for this career choice.

Below are additional points to consider before jumping headfirst into your new role.

When purchasing an investment property, a common mistake is underestimating the cost of repairs that a property will need before it is put on the market for rent. During the inspection phase of the purchase, do have a thorough home inspection completed to know what you’re getting in to and have firsthand knowledge of what will need to be repaired and replaced.

You’ll want to review all points on your inspection – including the major “systems” of the home, like heating and electricity – and you’ll also probably find that you’ll want to invest in upgrades to three common areas: water, flooring, and door locks. As a cost-saving measure, for instance, you may want to change the toilet to low-flow models.

Don’t underestimate the cost of repairs and maintenance of the property, both when getting a unit ready for a tenant, and when the tenant moves out.

Most landlords factor in the cost of insurance and taxes when figuring out the annual expenses of a property. Frequently, other “soft” expenses – such as landscaping, garbage collection, and regular maintenance – are missed.

According to Money Magazine, you should set aside 35 percent to 45 percent of the annual rental income to cover these costs, and it’s a good rule of thumb to account for only 10 or 11 months per year, assuming there will be vacancy at some point.

Your investment property should be run like a business, and remember that your customer is your tenant. Pre-screening will be vital to ensure that your rental is a good match for a tenant candidate, and not doing so can be costly – both monetarily and emotionally. That said, when it comes time to rent out the property, be thorough.

Tenants should be interviewed on the phone first. Then, it’s important to check your tenants’ credit, speak with their references, and confirm the source and amount of income. Once you’ve found a great tenant, get the lease signed.

While experience is a great teacher, these common mistakes are better to be avoided than lived through.

Being a landlord can be rewarding, and it’s best to know some common missteps of others before moving forward, to reap the results you aspire to.

Source: courant.com