Property rentals are among the most popular types of real estate investments primarily because it is the least complicated and your house is still intact. All you’re doing is to rent the property to someone, or people called tenants basically for profit. You as the owner becomes the landlord.
Now that you officially become the landlord of your tenants renting your property. If this is your first time, there are several things or first-time mistakes you must avoid in order to become successful in this investing venture of yours. Check out this article written by Amanda Gengler in Money.com and learn how to become an effective landlord without committing rookie mistakes.
Thinking About Becoming a Landlord? Avoid These 6 Rookie Mistakes
Ever considered becoming a landlord? There are plenty of reasons you might. For some, it’s the temptation to scoop up a cheap property before the last of the deals vanish. Or maybe you’re like the 39% of homebuyers who told real estate firm Redfin that they’re interested in renting out their old place. Then there’s the lure of steadily escalating rents. The cost of renting the typical single-family home or apartment rose 4.5% in the past year, and spiked by more than 10% in the hottest areas, according to Trulia.
Becoming a landlord can be a profitable move, but learning the ropes requires some effort; it’s easy to take a misstep and end up in the red. “It’s not a passive investment, like putting your money in a mutual fund,” says Robert Cain, founder of landlord resource site Rental Property Reporter. Below, six slip-ups frequently made by newbie landlords, and strategies that will help you avoid making the same mistakes.
No. 1: Underestimating costs
You’ll most likely account for your insurance, taxes, and if you have one, mortgage. But you might miss expenses such as water, garbage, gardening, and regular repair and upkeep tasks. Even riskier, you may fail to put aside a large enough pot for unexpected expenses and big-ticket items. “Mom-and-pop investors tend to skimp on reserve and emergency funds,” says John Yoegel, author of Perfect Phrases for Landlords and Property Managers.
No. 2: Breaking the law
Tenant and landlord laws vary from state to state and even city to city. For example, in some areas, you can require a month-to-month tenant to move out within 15 days, while in others you must give him 60 days’ notice. Yet when real estate site Zillow quizzed landlords on basic rental laws, the average respondent missed at least half the questions. One easy way to avoid getting into legal hot water: Never buy generic lease or other tenant forms, which don’t account for local laws, from a general real estate site or a big-box store, says Cain. To get the skinny on what’s permitted in your town, talk to your local or state landlord or apartment owners association. These groups usually cost at least $50 to join.
No. 3: Skimping on vetting prospective tenants
When you’re looking for a good renter, it’s not enough to trust your instincts, or even to go on a referral from a friend. “Landlords get in trouble when they are in a hurry to find tenants and when they feel sorry for someone,” says Cain. Browse the rest of the list here…
When you decided to become a landlord, never underestimate the cost of your property such as the insurance, taxes, as well as house utilities like home repairs, garbage, water leaks, gardening, landscaping among others. Failing to prepare for these costs could hurt your ability to earn from rental income.
With these underlying insurance, taxes, and house maintenance costs, you might be wondering if it is worth it to become a landlord comparing the rental income minus the cost. Holly Johnson wrote an amazing article in Lifehacker if becoming a landlord is totally worth it. Read the article below to learn more.
Is Becoming a Landlord Worth It?
The Current State of the Rental Market
Researchers blame the increase in renters on a convergence of factors, including a record number of foreclosures in 2008 and economic troubles caused by the Great Recession. However, it also points to certain benefits that make renting a popular option. Some of the pros of renting named in the study: greater mobility, protection from fluctuations in the housing market, and freedom from home maintenance and repairs.
The fact is, renting has simply become the best option for many. In fact, recent reports show that rents have skyrocketed in many parts of the country due to increased demand, so much so that the cost of renting has moved out of reach for many middle-class families. And while that’s bad news for those who simply want an affordable place to call home, it’s a real estate investor’s dream.
My Experience as a Landlord
Becoming a landlord might sound tempting, but—trust me—it’s not as glamorous as it seems. It’s also not nearly as passive as many think it to be, despite what Investopedia or others claim. As someone who has owned and managed two single-family rental properties for almost a decade, I must confess that the income I’ve earned has been anything but effortless. The truth: It’s actually been a lot of work. Click here to read the rest of this post…
As mentioned above, the author’s experience in becoming a landlord isn’t that glamorous. Indeed, there are lots of instances where landlords got the low end of the bargain where tenants not paying rentals on time, as well as damages inside the house like missing door knobs, busted windows, among others. Definitely, these issues caused a lot of headache for landlords. However, the rewards from rental payments are definitely worth it, and there are several ways to prevent cruel tenants from barging into your property.
Carefully screening your tenants is the best solution to avoid such problems, and there are lots of effective ways to screen tenants, Erin Eberlin suggested some tips to tenant screening. Read the advice below.
Great Ways to Find Tenants for Your Rental
Prospective tenants have to be able to find prospective landlords. They’re not going to magically show up at your property. You must draw a figurative map to lead them there. Several methods are at your disposal to help you reach the most people possible as quickly as possible. After all, time is money when you’re looking for tenants.
Find Tenants on Rental Websites
The Internet is a great way to reach the masses. Sites such as Craigslist and Trulia allow you to post free rental listings that are visible to anyone with Internet access who’s looking for an apartment in your area. The prospective tenant can narrow her search criteria based on rental price, number of bedrooms and bathrooms, or any other features or factors she deems to be important.
Sites such as Socialserve.com can help you reach the proper market if you’re interested in accepting government subsidized housing such as Section-8.
Be sure to reference your website URL in your ads if you have your own website, and make sure you list the property there as well.
Use Social Media
Millions of people use social media sites like Facebook, Instagram, and Twitter. Create a Facebook page, an Instagram account, and a Twitter account for your company if you have one. Otherwise, use your personal accounts to let people know you have a property for rent.
You can list your property on Facebook’s marketplace, post a status update on your account, post a photo of the rental on Instagram, or send out a tweet to your followers via Twitter.
Find Tenants Through the Newspaper
Some prospective tenants still look for rental properties in newspapers. Advertise your vacancy on a weekend, and on a Sunday in particular. This is when newspapers see the most traffic. Read the rest of the article here…
There are good reasons why property rentals and becoming a landlord has become one of the most popular types of real estate investment. While there are risks involved, it can easily be avoided by properly screening tenants, asking identity verification from them as well as proof of income. That way you’ll have the assurance of them paying rentals on a monthly basis. Sure there are additional costs, but preparing cash for additional repairs as well as taxes and insurance can be prepared ahead of time.
If you’re looking for property in Baltimore for rentals, or want to sell your house to raise capital in buying other property for rental, we at Dependable Homebuyers can help you in selling your house fast, finding the right buyer. Visit us on https://www.dependablehomebuyers.com to learn more.
1402 Belt St, Baltimore, MD 21230