A lot of people are interested in how to become a landlord due to the many benefits it can provide. If done right, it is one of the best and safest investments that you can make that can lead to financial freedom and stability.
Anyone can become a landlord if they have the right resources. However, in order to become successful, you need to follow certain guidelines that would allow you to make your business profitable.
If you really want to enter this line of business, then here are some helpful tips that you can follow to become a successful landlord.
Tips on How to Become a Landlord
Familiarize Yourself with Any Laws Concerning Your Business
The first thing you need to do to become a landlord is to know the different laws in your city and state relating to rental properties. You need to learn all the landlord-tenant laws and the federal laws about anti-discrimination and habitability. You need to learn zoning too — not all areas will be zoned for residential and some may have renting restrictions.
If you plan on using a loan to buy your property, know the restrictions and requirements of that loan. For example, some first-time homeowner loans require you to live in the property for a certain number of years before you can rent it or move out.
These laws will teach you all the things that you need to know to perform your duties as a landlord legally, such as issues regarding security deposits, eviction notices, and level of access to the property.
Choose the Right Rental Property to Buy
After you know all of the laws, the next thing you need to do as a landlord is to choose the right rental property to buy. This step is critical because it would determine the amount of income that you can expect to receive.
You’ll need to consider a variety of factors when choosing a property. This includes the location, type of property, price, the average rent of similar properties in the neighborhood, mortgage, and property taxes. The key is to create a balance between these factors so that you can maximize your earning potential.
If this is your first time purchasing a property then you should start small to minimize your risks and gain more experience before moving on to larger investments. That means don’t invest in a large apartment complex — start with a single family home in a good neighborhood.
Calculate Your Potential Income
After choosing a property, the next thing that you need to do is figure out your potential profit margin.
For example, say you spent $150,000 on the home. The mortgage is $700. You have about $150 in monthly expenses on top of that to pay for a property manager and maintenance. Therefore, you will need to charge over $850 in rent to make a profit each month. So if you charged $900 per month, you would earn a steady $50 profit.
Screen Your Tenants
After purchasing your rental property, the next thing you need to do is to screen your tenants. This step is crucial because it will enable you to determine whether or not a potential tenant will be able to pay their rent on time.
Furthermore, doing a background check on tenant applicants will allow you to avoid any problematic issues that may arise in the future. On the other hand, it is important to remember that it is illegal to discriminate against applicants based on color, race, religion, sex, and others.
If you have a property manager, they can help you with this process. They’re experts at finding you the right tenants, which means less headaches for you in the future.
Conduct Regular Inspection and Maintenance
Part of your job as a landlord is to conduct regular inspections and maintenance of your property. This is why you need to explicitly state in your contract with your tenants how often you will perform these inspections in order to prevent any misunderstanding and problems with them.
Performing inspections every three months is advisable and will allow you to keep a close eye on your property. This is a good round number that will enable you to maintain your property without disturbing your tenants too much. Just remember that you cannot enter the property without your tenants permission. You will need to schedule your inspections ahead of time.
Many landlords only inspect during move-in and move-out as well.
Final Words About How to Become a Landlord
Becoming a successful landlord is both fun and rewarding, as well as a lot of hard work. However, you need to exert a lot of effort and perform the necessary duties and responsibilities that are needed to manage your business properly.
You will need to be familiar with all of the laws surrounding renting in your municipality and state, learn how to make the most bang for your buck, and make sure you’re renting to the right tenants.
You can also help negate some of the pressure by using a property manager to manage your rentals if you’re either a first-time landlord or if your rentals are growing too quickly to manage all of them. As a landlord, you run the show. The choice is yours! We hope our blog helped give you insights on how to become more successful with it.