Perhaps you’re contemplating buying rental property, but you’re concerned about all the hassles that could be involved when you’re a landlord. Is owning rental property a lot of hassle? The answer to this question largely depends on the choices that you’ll make as a landlord.
Owning rental property can be exceptionally profitable. But if you make the wrong decisions, it can also be stressful and full of hassles. Here are some ways to prevent being stressed, so it’s an enjoyable and rewarding experience.
Estimate All Expenses Involved
One of the main reasons that some landlords have hassles is because they don’t calculate all the costs entailed in owning rentals. Before you even get started buying rentals, you’ll need to know how much it will cost you. Your largest cash expenditure will be your mortgage. Realize that you may have a somewhat higher rate on a mortgage for a rental. That’s why it helps to have an outstanding credit score and credit history.
Other costs you need think about are those related to property upkeep and repairs. You should have a strong enough cash flow to be able to pay for liabilities. In other words, make sure your cash cushion is large enough to cover more than a single refrigerator, air-conditioner or other appliances that could break and need replacing in the future.
Choose the Right Tenants
Selecting the right tenants is very important in reducing stress and avoiding an expensive and lengthy eviction process later. Here are some guidelines for choosing the right tenants:
- Besides choosing financially responsible tenants, you’ll also want to check the rental histories of tenants by speaking to their former landlords.
- Ask questions, such as if prospective tenants were faithful in paying their rent on time, respected property and whether or not they complained too much.
- Conducting a criminal background check at a local courthouse is also recommended, so you’ll be aware of any minor or severe offenses. To do a background check, you’ll need to know the names of potential tenants and their date of birth.
- What’s more, be sure any tenants you’re considering have legitimate photo IDs that confirm that they are who they say that they are.
Set the Right Amount for Rent
It’s important that you know how much rent to charge. One way to get an idea for this figure is to consult with other landlords who manage properties similar to the ones you want to buy. You’ll want your monthly rent amount to be reasonable, while still lucrative. When setting a monthly rent amount, consider factors, such as:
- Property location
- Condition of the property
- The local housing market
Have Rent Collected Online
Another common problem causing stress in landlords is rent collection. An effective way to lower stress is to have rent collected online. This is done by setting up an automated payment system, involving money transfer from a tenant’s bank to your bank account. In addition to making your bookkeeping more consistent, online rent collection can also help in alleviating all those excuses tenants have for being late in rent payments.
Additional Considerations and Warnings
- When searching for rental properties, check newspaper classifieds for properties that are like the one you’re thinking of buying.
- If the property owners are offering free months as an incentive, it can be a clue that there’s too much competition. If so, it may be better to look for properties in another area.
- For young, first-time renters who don’t yet have rental histories, you may need to require that a co-signer sign a lease.
Educating yourself is critical if you want to succeed in rental properties. For example, attend seminars, read books on property investment and participate in other learning opportunities that can show you how to make confident decisions as a landlord.
Don’t hesitate to call Landlord Property Management Academy. We have a well-deserved reputation for being the world’s leader in property management training, coaching and consulting. Please contact us and let us show you what we have to offer.