If there’s ever been an ideal time to get into the rental market, now is that time. Rent prices are higher than they’ve ever been, and just about anyone with some savings can easily start capitalizing on current market conditions. The financial threshold for entry is a bit high in cities with larger populations, but there are a surprising number of alternative options available that open this profession up to those who don’t have quite as much money saved up.
Of course, the actual process of getting yourself started in the rental game isn’t quite as simple as just buying an empty home or apartment and putting an ad in the paper. If you’re going to be successful in this business, you’ll need to be well prepared for what you’ll face on your path towards becoming a fabulously wealthy landlord.
Fortunately, when compared to other professions that offer similar levels of income, the amount of effort required to become a landlord is surprisingly insignificant. Aside from occasionally visiting your rental properties to perform routine maintenance and upkeep, most of the difficulty present in your role as a landlord will be encountered while buying and setting up your rental properties.
Part one: are you cut out for the job?
As a landlord, you will face situations where your tenants are simply unable to pay rent, due to the loss of their job, unexpected medical expenses or other unforeseen circumstances. In situations like these, you’ll have to make a tough decision: evict an individual or family from their home and potentially cause them to fall into poverty, or accept a reduced or delayed rent payment, lessening your monthly income.
Neither of these is easy, but we’re inclined to suggest that you’re better off choosing the latter route. While you’re legally within your right to evict tenants soon after they default on their rent payments, this will cause both of you a number of problems. You’ll be left with an empty apartment that may prove difficult to fill (especially if you’ve gained a reputation as a difficult-to-deal-with-landlord) and they’ll be left without a roof over their heads.
If you’re going to become a landlord, you’re going to need to prepare for unforeseen events such as these, and formulate a plan for what you’ll do when they occur. Oftentimes you can assist your tenants in obtaining government aid, but if that doesn’t work you may want to consider simply offering them an extension on their rent cycle. A little bit of goodwill goes a long way, and a good reputation is a desirable thing for a landlord!
Part two: studying up
Once this ethical dilemma is sorted, it’s time to roll up your sleeves and get to work. What is that work, you ask? Why, studying, of course! While the role of landlord is not overly demanding on a day to day basis, it does require you to be versatile and well learned enough to face a wide variety of challenges and obstacles on a day-to-day basis. If you’re going to do this, you’re going to need to know a thing or two!
First up, you’ll want to learn about the logistics and technicalities of working as a landlord. As your own boss, you’ll be responsible for everything from filing your taxes to hiring employees and conducting repairs on your properties. This will, understandably, require you to be thoroughly knowledgeable about the ins and outs of the business side of things. Take a landlord training course online or in person; you’ll thank us later on down the road!
Then you’ll need to learn about the various tasks you’ll have to perform or pay someone else to perform once you’ve got tenants in your rental properties. Although more successful landlords often pay maintenance workers to resolve these tasks, you probably aren’t going to have the resources to do this right off the bat. This means being ready to fix everything from a broken refrigerator to a clogged toilet!
Part three: searching for properties
With your studies completed and all the information you’ll need to be a good landlord firmly in mind, it’s time to find a place or two to rent out. Depending on how well you choose these investments, you could soon be raking in thousands of dollars a month, or you could be out your life savings with nothing to show for it.
If you want to avoid falling prey to the latter possibility, you’re going to need to buy the right rental property. To do this, you’ll need to find a real estate agent in your area who specializes in rental properties. With the help of your new ally, you should have little trouble finding a property that fits the parameters of a rental.
Once you have a property in mind, you can ask your real estate agent to help you complete the closing process, securing a property to rent out. You can do this upfront, or you can take out a mortgage on the property to enable you to keep some savings in the bank for any unexpected expenses or obstacles.
Part four: sprucing the place up
Unless you’ve purchased a property that’s in mint condition, you’re probably going to need to make some improvements to the living space. This shouldn’t be nearly as difficult as a complete restoration of a foreclosed property, but it will take a little bit of time and effort to pull off. This is where the real, physical work comes into play, so you may want to call up friends and family to help you with the task!
First up, you’ll need to repair any damaged or broken appliances, fixtures or construction. If the drywall has a hole in it, you’ll need to patch it. If the refrigerator doesn’t work, you’ll need to fix it. And, if the ceiling has water stains, you’ll need to find the leak and repair the damage. Once you’re through with this process, you should have a home anyone would be happy to live in.
Once that’s over, you’ll need to refurnish and modernize the space. Unless you bought an immaculately maintained and meticulously modernized property, this will likely involve a number of trips to the furniture and home improvement stores. If you’re looking to cater to a more sophisticated tenant demographic, you might even want to hire an interior designer!
Part five: finding tenants
At this point, you should be equipped with a pristine rental property that anyone would be lucky to live in. If you’ve done your job well, the place should be clean, stylish and functional as a living space. Before you can start reaping the rewards of your hard labor, however, you’ll need to find some tenants to occupy your rental property.
This step might seem easy and straightforward, but in practice it can be a little bit trickier than you might have expected. First of all, you’re going to need to find the right monthly rent price. Simply looking up the median monthly rent price in your area and setting that as your goal will invariably result in either an absence of tenants or a loss of possible income. Do your research and carefully set a price based on surrounding factors and competition.
Once that’s taken care of, you can go about the process of posting “tenants wanted” ads online and wherever else they’ll be seen by accommodation seekers. Additionally, you can speak with your real estate agent and ask them to put the word out about your rental property to anyone who comes to them seeking such a thing. In no time at all, you should have tenants!
At one point or another, most of us have considered getting into the rental game. At first glance, it’s a profession that offers a lot of profit for very little regular work. Once you do a little bit more research, however, you’ll quickly realize that it’s far from an easy job, and that it takes a lot of hard work to succeed in the field.
The good news is that, with commitment and careful planning, you can successfully realize your dream of renting out property and having a passive source of income that can put money in your bank account while you sleep. It’s well within reach, all you have to do is get your ducks in a row and start working towards that goal!