Being a landlord is a huge responsibility and can be a daunting role to step into. It also requires significant financial investment, though the returns can be excellent. You must think through the decision to buy a rental property and ensure you understand the risks and potential rewards.
You will need to understand what it takes to be a good landlord. While the rental market is excellent currently, you may find it challenging to find the best tenants if you get a reputation as a bad landlord. Read on for some of the most crucial things to consider before becoming a landlord.
Understand The Commitment
Owning a rental property is a business. You need to be available and responsive to your tenant’s needs and the maintenance of the property. Use a reliable property management company to save you time and effort in exchange for a percentage of the rental income.
Choose The Right Location
Find a rental property in a desirable location. Consider the type of tenants you want. A property near public transport and city life will be ideal for students, while a house near good schools in the suburbs will be perfect for families. The best locations will be pricier but will give the best return on investment.
Research The Law
Understand your legal responsibilities inside and out. Ensure the property you choose is permitted to rent out. Use an appropriate rental agreement that protects you and your tenants.
Find A Reputable Lawyer
Find a trustworthy lawyer and keep them on speed dial. Have them check over lease agreements before you offer them to tenants to ensure legal compliance. Choose a lawyer with good reviews and extensive experience in tenancy law.
Consider Financing Options
Decide how to finance your rental property purchase. Consider an interest-only mortgage to cut costs in the first years. Be aware that costs will rise after the interest-only period. Talk to financial professionals like The Home Loan Expert to find the right financing option.
Build An Emergency Fund
Ensure you have the money to cover emergency expenses. Build your emergency fund before you buy your rental property and keep it separate from other savings.
Decide How To Choose Tenants
Use a screening process to find the best tenants—request references from past landlords and employers to ascertain their reliability. Avoid renting to friends or family. If you find a good tenant, build a good relationship with them.
Make Rental Payments Easy
Offer multiple options for your tenants to pay their rent, including checks, bank transfers and secure electronic payments. Allow tenants to choose the payment method that is easiest for them.
Learn Conflict Resolution
Understand how to deal with conflict should it arise. Be polite and professional in all dealings with tenants. Find ways to work with your tenants to resolve issues.
Becoming a landlord can be a full-time job in itself. Ensure you understand the responsibility you owe to your tenant and the amount of time, money and effort that goes into being a landlord. Good tenants are the most important thing for a landlord, so ensure your screening process is sound and build positive working relationships with tenants.