Owning a rental property is a great way to maximize your investment, but being a landlord is a lot of work. Before you jump into the role, consider these tips:
1. Be Realistic
Understand that becoming a landlord is challenging and requires a certain temperament and set of skills. Repairs that need to be done often come up at inconvenient times, like a broken washing machine on the weekend, or a clogged sink first thing in the morning. Be sure that you are willing to give up your free time to help your tenants. Or, if you consider hiring a property manager, be sure the added expense will still yield a return on your investment.
2. Know the Market
When you set the rental fees for your property, it’s important to factor in unexpected repair costs that could come up. You want to make sure your mortgage is being covered with an additional 20% of the rent set aside for surprise expenses.
3. Find the Right Tenant
Take your time in finding the perfect tenant for your property. Conduct a background and credit check, even if it’s somebody you know. Ideally, a tenant’s rent should only make up one third of their monthly income which insures you will be paid on time.
4. Keep Detailed Records
Take photos of the property before your tenant moves in so that you have evidence of any damages or unauthorized changes. Creating a move-in and move-out inspection checklist for each tenant will help document whether or not they should be refunded a security deposit.
Remember that being a landlord is much more than simply collecting a check each month. Owning and managing a second property is like a full time job. Be sure you have the time and temperament to be successful.
