You may think that the life of a landlord is easy, but there is much more than collecting rent checks each month. If you want to be a landlord, you need to know all the highs and lows inherent to this position as well as some tips on how to become a successful landlord.
The Pros of Becoming a Landlord
Without a doubt, income is the main motivator for becoming a landlord. You will receive a decent amount of money every month that should be enough to cover your property’s outstanding mortgage. This means you can hang on to the property while it gains more value with time. If you already own the property, those big rent checks can be a lot more tempting.
Not only do landlords enjoy long-term securities, but they also have the flexibility of being the boss. You essentially manage your own business, which can be a highly rewarding experience. As the boss, you get to make all the decisions on contracts, costs and when you decide to sell your asset.
The Cons of Becoming a Landlord
Being a landlord is time-consuming. You need to screen prospective tenants, sort contracts, handle tenant disputes, undertake home maintenance projects and deal with taxes. Although there are some tax breaks for landlords, you will have to pay tax on any rental income. Also, you need to be well versed on the latest property law and legislation affecting landlords in order to protect yourself.
Tips on How to Become a Successful Landlord
- Know the Landlord-Tenant Law Like the Back of Your Hand
There are specific state laws in place that cover issues like level of access to the property, security deposits and how much notice you need to give your tenants if you want them to leave. You will also need to be aware of federal laws, such as anti-discrimination laws, to avoid falling into any liability traps.
- Don’t Rush the Tenant Screening Process
Even if it’s troublesome, you need to do a background and credit check on all your potential tenants. There are a number of ways you can screen potential tenants, but I suggest you look online for a convenient landlord tenant verification service.
It’s important to note that a credit score shouldn’t be the sole reason you deny or accept a tenant. For example, if you have a recent college graduate, their credit will most likely be poor but they may still be a perfect rental candidate. That is why you should always conduct an interview to make sure you are comfortable with them living in your property.
- Enforce Timely Rent Payment
This should seem obvious, but trust me, if you are too relaxed with your tenants and let them slide on timely payments, you can find yourself in a frustrating situation and six months behind on your paychecks.
If you don’t receive your rent payments on time, you will not be able to make your mortgage payments, so you need to be strict. This doesn’t mean you need to be disrespectful with your tenants if they run into financial problems. A good relationship with your tenants goes a long way and allows you to have honest communication and ensures that your rent payments will be made on time.
- Live Close to Your Property (If Possible)
If you live close to your property, you can conduct periodic inspections, take care of simple repairs and show the property to new tenants. Of course, you will need to provide proper notice before you can just drop by, but living close allows you to handle issues yourself instead of having to hire someone else.
- Be Aware of Your Financial Responsibilities as a Landlord
As you now know, being a landlord is not about collecting lots of cash every month. You need to be smart with your payments and be able to cover other landlord responsibilities. These include readying the property for new tenants, buying landlord insurance, paying property taxes, and maintaining the property’s health.
Now that you know the basics of what it means to be a landlord, it’s up to you to decide if becoming a landlord is the right path for you!