Many people are considering the possibility of becoming a landlord for a variety of different reasons. Some are buying a new home, and thinking about renting out their old place instead of selling it. Others want to buy an investment property specifically for the purpose of generating some revenue. In any case, you could benefit from these helpful hints for first time landlords.
Determine a realistic timetable for the payoff of your investment
. When you are a landlord, it is important to view this new endeavor as a marathon rather than a sprint. Don’t expect to make a boatload of money overnight. You might get lucky and find a property that allows you to rake in some extra dough every month right off the bat. For many real estate investors, though, it takes some time to see a payoff. Be prepared for the possibility that you may not see a significant profit until the property appreciates or the mortgage is paid down.
Budget for all of the expenses associated with maintaining the property
. Profit does not equal rent check minus mortgage payment. You have to plan ahead for property taxes, insurance, maintenance, and legal fees. Figure out how much of the rent you need to set aside for these expenses, and then you will know how much you can expect to earn, free and clear.
Develop a maintenance checklist
. It’s a good idea to talk to an attorney in your area and find out what the local requirements are for landlords. For example, you may be required to repaint the walls every three years or between each set of tenants. You should also have a regular checklist for inspecting and maintaining the unit between tenant turn over. This list should include checking for any potential safety hazards as well as regular maintenance, like carpet cleaning.
Get everything in writing
. Always use a formal, written lease agreement that spells out all of the rules and details relating to your arrangement. This should include the amount of the rent, the due date for the rent, the amount of late payment fees, and when those fees will be assessed. It should also include accepted payment methods so that you can deny renters who attempt to pay the rent with loose change. Yes, it really does happen. If you put it in writing up front, you can fall back on this document if there is a problem later on. Don’t forget to clearly state who is responsible for maintaining the yard or sidewalks, if applicable.
Choose your tenants carefully
. Never rent to family; it’s not worth the potential damage to your relationship. A casual acquaintance can make a great tenant, as long as you don’t have trouble being firm and businesslike with that person. Always run a background check and verify references from previous landlords. Your rental application should request information regarding the applicant’s employer, income, rental history, and reason for moving. Remember that you cannot choose a tenant based on things like age, gender, religion, or sexual orientation, but you can eliminate applicants based on poor credit history or insufficient income.
If you are a first time landlord in Phoenix or Scottsdale area, you can benefit from the assistance of a property management company.
McMath Realty
provides property management services, which means that we help you find a tenant, collect rent, and maintain the property. Give us a call to learn more today.