Rental property is one of the best investments you can make, and on paper, it seems pretty easy to get started. All you have to do is buy a property, pay a flat mortgage rate, and collect rent in excess of your mortgage payments, right?
In reality, being a landlord is much more complicated. You’ll be responsible for all the home maintenance that comes up (which may be many hours a week, or barely any time at all), you’ll be legally responsible for keeping the property livable, and on top of that, if you have a problem tenant, you’ll have to deal with significant headaches trying to sort everything out.
If it’s your first rental property and you aren’t sure what you’re doing, you might be intimidated at the thought of all those responsibilities—plus all the variables of finding the most profitable property to purchase and maximizing your return.
Fortunately, there are some strategies that can make your life easier (and give you more confidence as a landlord).
Try using these tips to make the process easier, less stressful, and less time-intensive:
1. Get your feet wet.
You have to start somewhere; if you wanted to get rental property experience before you bought a rental property, you’d never become a landlord. That being said, there are some ways to gain experience and prepare yourself for the realities of property ownership. For example, if you bought a home for your personal residence and have experience maintaining it, you’ll find it easier to manage a rental property that other tenants live in. If you practice some basic home repairs at someone else’s property, you’ll know what to do when you encounter the same problem at your rental property.
2. Focus on a single-family home at first.
Commercial properties, and properties that house many families and tenants, will bring you more income than single-family homes, but they’ll also be much harder to manage. If you’re just getting started, you’ll want to start small. Find one single-family home to invest in, and practice managing that for several months—at a minimum—before you consider investing in something bigger.
3. Pick a newer property.
Older homes are appealing for their charm, individuality, and maybe even their quirks—but they’re going to be a nightmare to maintain if you don’t have much property management experience. Instead, make sure your first property has been built within the past 20 years or so. Newer homes are going to be less vulnerable to wear and tear, and won’t need as many upgrades. For example, the electrical work will likely be up to code and installed with modern best practices, and the windows will be tightly sealed and reliable. As an added bonus, you may find it easier to keep a new property occupied than an older property.
4. Talk and work with other property owners.
Experience is the best teacher, but you can take advantage of the experiences of others to learn the ropes of being an effective property manager. Track down and talk to other property owners in the area, and ask them about some of the biggest challenges they’ve faced so far (and how they’ve faced them). You might be able to find a networking event or social group for landlords in your area on a site like Meetup, or you could meet property owners through general networking events. Either way, try to find yourself some loose property “mentors,” and learn whatever lessons they can teach you about successful, profitable property management.
5. Get a network of contacts you trust.
Next, work on building up a network of contacts that you trust. These should include general contractors and specialists in a variety of different fields related to your home. For example, you should have the contact information of a good plumber, a good electrician, a reliable lawn care provider, a general handyperson, and maybe even a lawyer or financial advisor. There’s no way you’ll be able to do everything yourself if this is your first property, so it pays to have a list of high-quality, affordable people you can trust to help you out. You can find these people through other property owners you know, or by tracking them down individually at networking events and other opportunities.
6. Be proactive with upgrades and maintenance.
Try to stay as actively involved in the ongoing maintenance of your property as possible. If you notice a pinhole leak somewhere, get it patched immediately. Change the air filters sooner than you need to. Run regular inspections, and address even small problems without delay. This will prevent much bigger problems from forming, and will save you both time and money in the long run.
7. Screen your tenants carefully.
You may be tempted to fill your property as quickly as possible; after all, the faster you get someone in your property, the faster you’ll start generating revenue. And it’s true that empty properties are one of the biggest threats to your profitability. However, it’s almost always worth your patience and diligence to screen your tenants carefully. Look for candidates that have a strong history of payments, a reliable job, intentions to stay in the area for several years, and a good attitude overall. Even if it takes you three months to find the right candidate, you’ll save yourself trouble in excess of the additional costs you bear.
Getting Additional Help
If these tips aren’t enough to make you feel more comfortable with the process of becoming a landlord and managing your own rental property, there is another option that will allow you to remain profitable while mitigating or eliminating almost all the stressful responsibilities. Hiring a professional property management service, at the right price, will spare you the strain of screening tenants, maintaining the property, and dealing with hectic outcomes like evictions—all while securing you the majority of your rental income.
If you’re interested in learning more about property management, or enrolling in the service now, contact Green Residential today!