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Rental property has long been considered one of the best investments anyone can make. If you have recently become interested in this area and you’re thinking about becoming a landlord for the first time, it’s important to be prepared before buying your first property. While owning rental property is a great way to make a consistent monthly income, it can just as easily steal money from your bottom line each month if you don’t know what you’re doing. Read on for 5 great tips to help any new landlord.
When I purchased my rental property back in 2007 for full price at the top of the real estate bubble, I obviously made all the wrong moves. I didn’t know anything about being a landlord and I sure wish I had. Because I wasn’t prepared, I lost a lot of money. Not only did I pay too much to acquire the property, I also put too much money into high-end upgrades for a home in a less than mediocre area.
So you see, becoming a new landlord is about more than just buying the property. It’s about knowing how much money you should spend, how to market the property effectively, and understanding your responsibilities as an owner. And with that, let’s take a look at what you need to know!
1. Understand Your Responsibilities
There is only one place to begin, and this is with understanding your responsibilities as a landlord. You can find out more about this here: https://blog.openrent.co.uk/renting-property-checklist-new-landlord-responsibilities/.
You will need to stay on top of maintenance and repairs, collect rent, and handle all legal aspects of things. Making sure your insurances are topped off is a very good idea. If all this sounds like a bit much for a new landlord, not to worry, you have the option of hiring a property manager to most or all of it for you. If you do decide to go with a manager, make sure you factor their monthly fee into your expenses.
Being a landlord is not for the faint at heart. In essence, you are a business owner. So be prepared for the ups and the downs. When I say downs I don’t just mean late rent payments. You might also experience a tenant stealing from you or vandalizing your property.
But if you follow some of the other tips outlined in this post, you’ll be able to greatly reduce the possibility of some of the bad stuff. Read on.
2. Screen Tenants Carefully
To reduce the risks associated with renting and to maximize your profits, you need to screen potential tenants carefully. This usually involves conducting a credit check, confirming employment, and a phone call or two to past landlords. If these 3 checks come back in good standing, chances are you’ll get your rent on time every month.
It’s also not a bad idea to drive past their current place of residence. If it’s clean and neat, chances are that’s how they’ll keep your property. The opposite is also true. Never underestimate the power of due diligence when it comes to tenant screening.
3. Set A Competitive Price
If you are yet to purchase a property, it’s worth looking at high-return investments. You can find out more about this at https://highreturnrealestate.com/turn-key-rental-properties-investment/. If high-return investment properties aren’t your thing and you want to start small, keep reading.
It is essential to do your research so you can find out the monthly rates being charged for similar properties in the area. To do this, check local listings with property management companies. Most companies will list their current open rentals with pictures, location, and amount to rent. You can also scour Craigslist. Oftentimes, property managers will also list their properties there for maximum exposure. Private landlords operating without property managers also use such sites.
You might also post your property as a trial on a site like Craigslist to see how much response you get at a certain price. If it’s crickets, you’re probably asking too much. If your inbox gets flooded with emails within five minutes, you’re probably not asking enough. Whatever you do, be prepared to conduct some extensive online research.
4. Market Your Property Effectively
You will need to market your property effectively if you are to secure the right tenants, at the right price, and do it quickly. This involves taking high-quality photographs, which is something most landlords and real estate agents still get wrong.
On top of high-quality photos, you will also need to write an attractive, easy-to-read description, which contains keywords so that it is optimised for search engine results.
Tips for showcasing your property:
- Take outdoor pictures when the sky is blue and there is good light.
- Clear all clutter before taking interior pictures.
- Arrange furniture to maximize the space.
- Use bulleted lists when writing your property descriptions. No one wants to read lengthy paragraphs.
- Highlight the property’s best attributes with keywords, such as hardwood floors, stainless steel appliances, etc.
Other articles you might enjoy:
- 10 Mistakes You Need To Avoid When Selling Your First Home
- All The Jobs And Mistakes – Before We Were Mr. and Mrs. Mad Money Monster
- Why We Include Our Home’s Value In Our Net Worth
- Investing In A Vacation Home: The Pros And Cons
- My Not So Exciting Adventures As A Tenured Landlord
- What To Do When You Realize Frugality Won’t Make You Rich
5. Prepare Your Property For Future Tenants
Finally, you need to ensure the property you are going to be renting is ready for tenants. These days, tenants are more choosy and attentive than ever before. This is because there is a greater pool of rental homes available to select from and, therefore, expectations are high.
To stand out from the competition, you need to make sure the property is cleaned thoroughly and that all appliances and mechanicals are in good working condition. Maybe consider upgrading a few things or installing hardwood floors.
Keep in mind, a large portion of tenants are looking for the same amenities as home buyers. Remeber that and you’ll rent your property to quality tenants in no time at all.
Hopefully, you now feel more prepared for beginning your quest as a new landlord. If you incorporate the tips that have been provided above you should experience a smooth and profitable transition into your new role.