Being a new landlord can be difficult, but the payoff can be great if you do things right. It’s imperative to educate yourself early on so that you don’t make the usual mistakes that slow down (or discourage) first-time landlords. Here are some tips to help you:
Don’t be afraid to spend
Whether you’re looking to diversify your investments or trying to grow your passive income, buying a rental property is a great choice and is very popular among other investors. However, there seems to be a growing aversion toward spending money on a rental property. Seasoned landlords will tell you that investing money on the rental, whether by making small renovations or hiring property management experts, can help you make money.
It’s easy to think that money going out is something that you’ll never get back, especially if you’re new to rentals. The truth is that putting in a new boiler or fresh paint can increase the rent by as much as a few hundred dollars. Multiply that by twelve months, the annual difference that it makes can be very significant. Same goes for hiring a property manager. Remember, your time is money! The less time you spend on attending to late night calls and other tenant headaches, the more time you can spend on your other pursuits!
Screen tenants thoroughly
Anybody who’s had experience in renting out property will tell you that a bad tenant can drive you out of business quickly. Many landlords make the serious mistake of being too eager to get a unit rented out and in doing so, fail to vet prospective tenants properly.
You have to make sure that the tenant can pay or afford the rent. It’s not enough that they have money for the first and last month’s rent. You should ask them for references from their previous landlords and a copy of their pay stubs from work.
Decide if you’re going to allow pets
There are a lot of horror stories online about tenants from Hell, and they usually involve animals! Unfortunately, as cute as these critters are, they can ruin a home quickly! Stains, stripped-off paint, infested carpets — the list is endless. Think twice before allowing tenants that have dogs or cats! The general advice from pro landlords is just not to allow it. Okay, maybe a fishbowl!
Check on tenants periodically
Don’t be a helicopter landlord and knock on your tenant’s door every day for every little concern. Still, make sure that you drop in once in a while to check up on them and the property. Of course, never come unannounced! This is usually spelled out in the contract. Let the tenant know that you’ll be making a quick stop ahead of time. Make it regular so that it doesn’t turn awkward. This increases the chances of keeping good tenants and busting those who are not worth keeping!
In the end, these are just some tips that should help you in your first foray into being a landlord! It’s exciting, and there are many things to learn. Enjoy the journey!