You own a house, then you want to rent it to make some money, that makes you what they called “a landlord”. Basically, this is a type of real estate investing by means of renting a property; a house or a multi-room apartment for the sole purpose of making money out of it by renting it to what we called “tenants” in a span of time. With a lot of people migrating from one city to another for various reasons and with the current real estate market in an uptrend, property rentals is definitely a good investment.
However, you need to possess some skills and confidence to become a successful landlord to avoid getting scammed, making your tenants to pay on time all the time. No need to worry if you’ve just become a landlord for the first time. Jimmy Moncrief published an article in Landlordology tips for first-time landlords. Read his awesome tips below:
Top 10 Tips for First-Time Landlords
My hope is that this article will educate you so that you don’t make the same mistakes as I have. Here are my top 10 landlord tips.
1. Make Rent the Priority
Rent is your revenue. It’s amazing how many landlords are not aggressive in pursuing rent and late charges. It’s sometimes a good idea to work with people who generally need help … if they communicate with you.
But if your tenants just stop paying rent and ignoring your calls or texts, you need to start eviction proceedings. Otherwise, you could be six months behind on rent before you know it, which makes this probably the most important of all the landlord tips.
2. Partner With The Right Investor
I have an amazing business partner who is completely honest and transparent, two qualities that are absolutely critical when choosing business partners. For some reason, some new landlords are very willing to partner with somebody they barely know just because a deal looks good. This is usually a mistake.
I knew my business partner for over five years before we did a business transaction together.
Additionally, we have the same end-goals and values, which is what ultimately influenced my decision to invest in properties with him.
3. Screen Tenants Properly
Screening tenants is a really big deal, and I am the first to admit that I have made some serious mistakes in this area. My first multifamily tenant had a 480 credit score, couldn’t produce previous rent references, and didn’t have a job.
Take a wild guess as to how that ended-up? Let’s just say that anything under 600 is considered bad credit. If you wish to be more prudent, here is the breakdown:
- Excellent credit — 750 and above
- Good credit — 700 to 749
- Fair credit — 650 to 699
- Poor credit — 600 to 649
- Bad credit — anything below 600
4. Don’t Allow Cats
Sorry if this is offensive to any cat lovers out there. I’m sure your cat is awesome. However, I’ve had a very bad experience with cats and will never forget it.
I renovated a property and was really excited about the new carpet I installed. I then rented the place to a manager of a local restaurant.
She paid on time for several months but then disappeared. She was relocated but didn’t tell anybody. She also “forgot” to bring her cat with her. The entire unit spelled like cat pee for several months, even after I installed new carpet. Lesson learned.
5. Don’t Ignore Extra Income Opportunities
Most investors think 1-1. What do I mean by that? If somebody buys a house, they simply rent the house out and that’s it. But that method means you could be ignoring several extra income ideas that could improve your property’s return on investment.
Here are some out-of-the-box ideas to think about for earning extra money:
- Could you install solar panels? Look into selling back any excess energy generated to the grid.
- Is there room on the property to install a billboard and/or cell phone tower?
- Is there an unused shed that you could rent out for self-storage?
Being a new landlord entails with lots of challenges, risk, and even pitfalls. There are ups and downs, but with experience, you can minimize these risks. The abovementioned tips are indeed very helpful, and these tips and tricks written by Brandon Turner in BiggerPockets will help you succeed in becoming a landlord. Check out these additional tips below.
How to Be a Landlord: Top 12 Tips for Success
Being a new landlord entails with lots of challenges, risk and even pitfalls. There are ups and downs, but with experience, you can minimize these risks. The abovementioned tips are indeed very helpful, and these tips and tricks written by Brandon Turner will help you succeed in becoming a landlord. Check out these additional tips below.
When I first wanted to enter real estate investing, I heard time and time again all the reasons why landlording is a terrible idea. I’m sure you’ve heard them, too:
These generalizations are not unfounded. Many investors become landlords and quickly find they are overwhelmed by the amount of work it takes to manage tenants — especially in low-income areas or in multifamily properties (both which I own.) These landlords often find themselves burned out because they never learned how to be a landlord.
Over the past five years I’ve made a lot of mistakes, learned a lot of lessons, talked with a lot of other investors (both successful and not), spent a lot of time on the BiggerPockets Forums, and read an absurd amount of books. During this time I’ve learned a lot of “hacks” from these sources that have made landlording much easier to handle. I finally feel Like I know how to be a landlord – and can help others feel the same. Some of these might work wonders for you – others may not work at all. However, these are all tricks that have helped me manage dozens and dozens of properties and still love investing in real estate.
How to Be a Landlord: Top 12 Tips for Success
12.) Be Smart About Rent Collection
Are you still trekking around the city collecting rents from your tenants physically? Stop! Not only is showing up at your (potentially financially strapped and therefore stressed/angry) tenants’ doors possibly dangerous, but it’s incredibly tedious, time-consuming, and inefficient!
Instead, check out alternative options, from electronic pay systems to an ACH (automated clearing house) to withdraw money from the tenant’s bank account.
11.) Start Adding Systems NOW
You’re just a “mom and pop” landlord looking to make a little side income, right? No need to hone your methods or organize paperwork.
WRONG. If your ultimate goal is to achieve more free time and not be tied to your day job (and yes, landlording can definitely be a demanding day job), you’ll do yourself a HUGE favor to start building systems now. That way, when you’re the proud owner of 10, 20, maybe even 50 rentals down the road, you’ll be able to step away seamlessly for that early retirement — and your business will still run like a well-oiled machine.
10.) Be Knowledgable
To make landlording an easier task, you need to be well equipped to handle the problems that you will face. The best way to do this is through education. Books, courses, and mentors are all great ways to improve your abilities. When you have questions, don’t just shoot from the hip. Head over to the BiggerPockets Forums and ask your question in front of thousands of seasoned investors to learn what works and what doesn’t. Listen to podcasts, talk with other investors, and teach others what you know.
9.) Create a Policy & Stick to it
If you are running your rental business off the top of your head, making up the rules as you go, you are opening yourself up for a lot of hassle. Tenants will know if you are making rules up on the spot (no, you cannot pay rent in quarters) so having a written policy — that your tenant has — will make life much easier. Rather than trying to explain why a certain action is not allowed, you simply can refer to the policy.
“I’m sorry Joe, our policy states that rent must be paid by a cashier’s check or money order.” People tend to not question “policy” even if you are the one who created that policy. Once that policy is created, don’t deviate from it.
These tips will absolutely prepare you to the challenges that might come as a landlord. Follow it thoroughly and successful will definitely within reach. The different city has different conditions when it comes to renting a property for business purposes. While these tips must be followed, there are also several mistakes committed by novices that you must avoid for they are proven to be costly. Central Inspection published an article about these mistakes. Read them below.
The Seven Biggest Mistakes Landlords Make
Here are the seven biggest mistakes landlords make – either because they are new and inexperienced or they are just plain bad:
1. Not Screening Your Tenants
In a recent article, I said the number one rule of successful landlords was “Screen Your Tenants.” Likewise, the biggest mistake of bad landlords is failing to screen tenants. The importance of proper tenant screening can not be overstated.
Good tenants will pay the rent every month and take care of the house. Bad tenants will pay rent late — or not all – will destroy your house, and possibly damage you in other ways (like dragging you through the court system of causing you to begin drinking heavily or suffer a heart attack) that can cost thousands of dollars in damage, lost rent and eviction fees.
This error is usually committed by new, inexperienced landlords. They are eager to get the house rented as soon as possible because they are not collecting any rent. However, savvy landlords know it’s far better to have a property sitting vacant than to have the wrong people living in it. Taking the time to choose quality tenants will save you money in the long run.
How to conduct a thorough background check is beyond the scope of this article, but there’s lots of information available thanks to my friend with a one and 1,000 zeros. Please educate yourself and know the ins and outs.
You may want to consider a tenant placement service that will conduct background checks and supply you with reports. You still have the right to accept or reject any applicant. They typically charge the equivalent of one month’s rent for this service.
2. Renting the Home Before It’s ready
If there are any problems with the house, take care of them before tenants move in. Sometimes you may not be aware of problems, and they may not be readily apparent. Run all plumbing, electric, and appliances to simulate how they will be used once the house is occupied.
Make sure all faucets run properly, turn off and on, and all tubs and sinks drain properly. Test the showers and toilets. If a shower is not working correctly it could be a major repair if the shower diverter has to be replaced. Much better to do whole the house is vacant instead of after tenants move in – particularly if it’s their only bathroom.
Make sure all outlets work and are properly grounded. You can test outlets with an outlet tester such as the one pictured here. It’s from Harbor Freight but Lowe’s and Home Depot sell similar products:
They have a label indicating what the colored lights mean. The most common problem is open ground. If you have an older home, you may have some two-wire branch circuits, meaning there is no ground wire. Contrary to what many Landlords and Harry Homeowners do, it is not acceptable to install three-prong outlets to these circuits. The tester in that case will reveal there is an open ground. (You can, however, install GFCI outlets since they do not require a ground).
Testers come with or without a GFCI (ground fault circuit interrupt) button. I recommend using one with the GFCI button in order to easily test GFCI outlets.
3. Ignoring Your Properties
Similar to last item (renting the property before it’s ready) this mistake is the result of landlords ignoring problems because they don’t want to devote the time or expense to fix them. Some landlords feel they will maximize their profits in this way. On the contrary, it will wind up costing more money in the long run, so I recommend taking care of repairs promptly. For example, a leaky pipe can cause mold, floor and wall damage, etc … if left unrepaired.
You should also conduct periodic inspections of your property. Of course you want to respect your tenants’ privacy, but you also need to be able to check on your investment. Your rental agreement should have a clause granting you access for such inspections with proper notice (usually 24 hours). I recommend visiting all of your properties at least every few months.
4. Asking Too High Rent
Do you remember the candidate from the Rent Is Too Damn High party? Would you want to be his landlord?
Obviously you want to maximize your profits, but if the rent you’re asking is too high it can cause several problems. First the property may sit vacant longer than necessary. Second you may attract unqualified applicants. They tend to be desperate because they have few options. High rent is not an issue for them, especially if they’re not planning to pay!
Good tenants, on the other hand, can afford to be selective because they do have options. They have decent income, references, rental histories, etc …, and will choose the best home at the best value.
Do some research and find out what rents are for comparable homes in your area. Then price your rental property at the lower end of the range. See full post here…
As mentioned earlier, there are always ups and downs in becoming a landlord, renting it to someone in need. While you can make lots of money from it, you’re also facing a huge amount of risks when tenants failed to pay their dues, even destroying some parts of the house. That’s additional repair cost on your part.
Baltimore landlords often experience delinquent tenants not paying dues on time, even taking a while to pay, some just leave the property without paying their debt. If you’re tired of all of these problems of tenants and house repair maintenance and want to sell your home to venture into other business opportunities, Dependable Homebuyers will help you sell your house fast and get rid of landlord problems completely. Visit us on https://www.dependablehomebuyers.com to get started.
1402 Belt St, Baltimore, MD 21230