Becoming a Landlord
There are a lot of reasons for becoming a landlord. You may find yourself in a position where you need to move. However, you own a home that you cannot (or do not want to) sell. You might be attracted to the idea of buying an investment property when prices are low. Then, renting it out for years to come. Whatever your motivation, becoming a landlord can be a great source of income, but it can also be a little bit intimidating to get started. Learning the ups and downs of how to become a landlord before you invest in a property is a smart move.
The Ins and Outs of Becoming a Landlord
Buying a Rental Property
If you are simply renting out the home you already own, this part is taken care of! But if you are in the market for an investment property, you want to carefully consider which home you will buy for a rental property. Research the local rental market. Is the area flooded with available rentals? Does your property stand a good chance of being rented out quickly? Look at the rent for similar properties and use that as a guideline for setting your own rent. If you are carrying a mortgage, will your rent cover the mortgage? Ideally, the rental income will exceed the mortgage payment. Plan ahead and save that money for repairs.
Like any home, a rental property will require repairs and improvements over time. When you search for a rental home, be realistic about how much work it will need to make it rental ready. Plan ahead to invest in it, either with sweat equity or cash. Even if a home is in good condition, something will break eventually. Your tenants will expect you to fix the problem, even if it is in the middle of the night or on the weekend. Make sure you are handy enough to handle most household maintenance or hire a property manager to take care of it.
Finding Good Tenants
Having good tenants is just as important as having a solid house. You can advertise on Craigslist, Facebook, or the local newspaper. If you live in a college town, the university often has a rental listing service. Listing your rental property with local real estate agents is a great way to find good tenants. Not only will real estate agents actively market your property, but they will also perform a background and credit check for you. Whether you list with an agent or not, make sure that you look at your potential tenant’s rental history and credit score. They may be the nicest people in the world, but if the rent is too simply too high for their income, they may end up paying the rent late or skipping it altogether. If you use a real estate agent, they can provide you with a standard lease; otherwise, look for a basic version online.
Keep an Eye On the Property
Take pictures before occupancy begins, and periodically inspect the property for damage (just let your tenants know before you show up!). Good records allow you to properly charge tenants for any damage they cause as well as allow you to fix problems before they get worse.
If you are interested in becoming a landlord in the Lancaster, PA, area, reach out to The Jeremy Ganse Home Selling Team. Our experienced real estate agents would love to help you find an investment property.