Did you know that there are more than 48 million renter households in this country? That’s a lot of rental properties and tenants.
That’s also an encouraging number to factor in if you’re considering buying rental properties to become a landlord.
Being a landlord might not be the easiest job in the world, but it is a job that many people enjoy and are good at. Are you wondering if you have what it takes to be one?
Learning what it takes to be a landlord and what to expect when owning rental properties can help you decide if this is right for you. Here is a guide to help you learn the top things you must know before buying rental properties.
Know What to Look for When Buying Rental Properties
Investing in rental properties is not for everyone, as it is a business that requires a lot of work. It can be a profitable endeavor, though, especially if you buy the right properties.
How do you buy the right ones? The best way is by knowing what to look for in the investment properties you buy. Here are several factors to find in the properties you buy:
You can find cheap properties to buy in run-down locations, but these areas often have high crime rates.
You might have trouble finding good tenants to rent to if you own these properties. You might also encounter vandalism and other crimes.
You will need to stick with searching for rentals in good areas that are safe for people. You will find better tenants in good areas and experience fewer problems.
While it is not a bad idea to invest in properties that need some work, you should avoid homes and apartments with major structural issues.
You might want to hire a home inspector to assess any properties you consider buying before you buy them to ensure that they meet your standards.
Buying rental properties in areas where there is a demand for them is also vital. You can learn more about the demand by consulting with local real estate agents.
Run the Numbers Before Buying a Property
Another factor to consider when choosing properties is the financial details about them. Running the numbers can help you determine if it is a good investment or not.
To run the numbers, you will need some information. The first thing is the cost of the property. You should add up the cost by including the purchase price and the money required to prepare the units for rent.
Next, you must find out the annual cost for repairs and maintenance the property requires. Finally, you should consider the rental income you can receive from the tenants you choose.
When you compare all these numbers, you will see if there is a positive cash flow from the rental. If so, this might be a good property to buy. If not, you should avoid it and choose another property.
Understand the Duties of a Landlord
Before buying rental properties, you might want to research the duties of a landlord. Becoming a landlord can be a full-time job. It can be stressful, overwhelming, and difficult, but it can also be rewarding and profitable.
As a landlord, you will be required to do the following things:
Maintain the Rentals
You are legally required to provide safe, inhabitable properties to your tenants. Therefore, you must keep up with the maintenance of your units. You must fix things when they break and ensure that the units are safe.
Find and Maintain the Tenants
Landlords are also responsible for finding and maintaining the tenants they have in the units. You will have to advertise the properties and screen tenants when they apply.
If you encounter problematic tenants, you will have to handle the evictions. You will also need to respond to your tenant’s questions and concerns when these things arise.
Respond and Solve Property Issues
Tenants will call you when they experience problems, and you must respond to these and solve the issues. If your tenants have emergency issues, like water leaks, you must respond in a timely manner to these requests.
Collect the Rent and Pay the Bills
Landlords also collect the rent from the tenants and pay the bills for the properties. Additionally, landlords will collect security deposits to ensure they can cover damages to the property.
Handle the Paperwork
Managing a rental property business involves a lot of paperwork. Handling the paperwork is a big job, but it is also a necessary one.
Learn How to Properly Operate a Rental Business
Finally, you will need to learn how to properly operate a rental property business before you start purchasing rentals. You can follow the tips listed to learn how to do this, but here are some additional tips:
Hire a Company to Handle Some Work
Many landlords hire property management firms for help. They might hire the firm to handle all the duties needed for the properties or only some.
Hiring a company to help you manage the properties reduces the work you must do, and it helps by having a professional assisting you with your rental property business.
Consider Becoming a Passive Owner
Secondly, if you read these 6 steps, you can learn how to become a passive owner of a rental property business. Passive owners do not do the work required for the business, yet they benefit from the revenue.
Realize This Business Is a Long-Term Operation
Finally, you must realize that a rental property business is a long-term operation. You might not make money for several years, but eventually, you can earn a good living from the profits.
Start Investing in Real Estate to Create a Profitable Business
Are you ready to start buying rental properties to earn long-term revenue? If so, you might want to contact a real estate agent to help you locate properties for sale.
If you loved this article, you might enjoy other articles on our blog. Check out the rest of our blog for more interesting and informative articles about real estate investing.