Real estate investment is certainly not a new idea, but it is becoming trendier by the minute these days. Property-flipping television shows and a healthy housing market have a lot of people looking for a piece of the action.
Investing in rental property is a lucrative opportunity, especially if you can snag a great property in a prime location. If you're a first-time landlord, there are a few things you should know before your first tenant moves in. Becoming a landlord can be a profitable, clever financial move, but do not underestimate the rigors of the job.
So, how do you become an admirable landlord and secure stable, qualified tenants? If you're new to the landlord game, follow these 5 strategies for maximizing your investment:
1. Knowledge Acquisition
Before you are officially dubbed a landlord, it's vital to have a solid knowledge of the real estate market and property law. Conduct plenty of research on the housing industry and the market where you intend to purchase a property. Learn and understand the law so you don't get caught in a sticky situation down the road. Working with professionals like a property management group can aid you in this process and can even help find you a promising property.
From there, figure out what kind of tenant you want to see in your property. Are you envisioning a four-person family home or more of a bachelor pad? Your tenants will shape your experience as a landlord, so it’s important to consider who you want to work with. Brush up on the different types of communication styles and conflict resolution steps. Learning how to spot red flags and diffuse stressful situations can come in handy later on. If you’re not the type to resolve conflict head on, partnering with a property management company live Reedy and Company Realtors, LLC may be a good option.
If you've never been one for filing systems, labels, or colorful Post-it notes, you're going to need to take a trip to your local office supply store. Having tenants means dealing with applications, credit checks, rental agreements, maintenance orders, payment records—the list goes on! For the property itself, there are payments, insurance and other documentation to consider. You need to have well-functioning systems in place before your first tenant moves in. Without proper organization, you risk missing payments or losing important paperwork.
Particularly if you plan to grow your investment to include multiple properties, that could mean dozens of tenants to track—potentially over a period of years. Staying organized will not only save your sanity, but it could prove vital if a dispute ever arises between you and a tenant. Hiring a property manager can benefit your organizational skills, as they are familiar with the business and can share their knowledge and experience with you as a new landlord.
3. Firm Payment Due Dates
Depending on your personality, collecting rent payments may be the best or worst part of your job as a landlord. Though you may empathize with tenants who miss a payment due to unfortunate life circumstances, you can't overlook it. One missed rent payment easily snowballs into three or four missing payments. This sets you up to fall behind on your own bills and destroys any profit margin. Not to mention, you'll have to initiate a long and uncomfortable eviction process.
You should consider using a property management company to secure rent payments from your tenants. They can help you set up an electronic system that allows tenants to easily pay online and makes it easier for you to track their payments for your records.
4. Outsource Maintenance Work
You might be an outstanding handyman, but you should refrain from handling all property maintenance yourself. Trying to do everything for your tenants can seriously cut into your personal time and have you stretched too thin in no time. Even if you have the time and the inclination, some maintenance work should be left to professionals, as you don’t want to make a mistake that makes things worse or elongates the repair process, irritating your tenants. Bringing in licensed professionals also shows your tenants that the repairs are legitimate and that you're willing to invest in the safety and function of their home. Reedy and Company has a fully staffed maintenance team to handle all repairs and damages to a home so you don’t have to worry!
5. Don't Rent to Friends & Family
The reason you purchased an investment property was to make money, right? Renting to your friends and family is the fastest way to not achieve that goal. For starters, you're much more likely to be lenient about missed rent payments when the tenant is your sister or your best friend. Additionally, disputes about the property can bring your relationship to a crashing halt.
If you want to continue a happy, healthy relationship with someone, don't become their landlord. Despite having the best of intentions, it's just not a good idea.
6. Bonus Tip: Hire a Property Manager
Being a landlord can be a serious headache, but it can also be extremely lucrative. Hiring a property manager can alleviate the stress of being a landlord and can help you with the tips above. Property management groups can assist in your organization as a new landlord, make it easier to collect rent payments online and on time, and can offer maintenance services from trusted professionals. As a first-time landlord, working with a property manager can also make you appear more legitimate and professional to potential tenants, and will help you to be more profitable with your investment in the long run.
Like any other endeavor, becoming a landlord will have its ups and downs. With a good amount of research and patience, you can be highly successful as an investment property owner. Our team of experts is committed to balancing the needs of the tenants with the interests of the property owner so that all parties are content and can work together seamlessly. Reedy and Company Realtors, LLC offers more to property investors than most in the industry, including in-house maintenance, leasing and collections, sales and acquisitions and more. For more information, visit reedyandcompany.net