When you think of a landlord, what comes to mind? For many, it might be the classic scene in movies as our wayward hero comically avoids their evil landlord asking for rent, yet again. They sneak by the door, climb out the window, and do everything they can not cross paths.
Even though collecting rent is the end game for many landlords, there is much more than pestering your tenants for rent.
Being a landlord can be quite rewarding and lucrative. With so many people renting these days, it’s a solid business to enter into. If you’ve ever considered becoming a landlord or are exploring the idea, then you should check out this list of things you should consider.
Considerations to Think About Before Taking on the Title of Landlord
This Isn’t Your Typical Job
If you grew up working in an office, you might be used to showing up at 9 and heading out at 5. When it comes to being a landlord, there are no set hours. You might have one day where you’re working on a crossword puzzle the whole morning and the next day you’re repainting the siding on one of your properties.
That’s one of the biggest things to think about in becoming a landlord… wearing all the hats… What if you did all the techniques to paint your property like a professional but then the paint started to chip shortly after your tenants moved in?
Did you know they could sue you for that?
In taking on the repairman role for your rental property, just make sure you have handyman insurance to protect you in case a tenant seeks litigation for some type of property damage incurred.
Maybe repair work isn’t your typical job… Maybe you’re an accountant by trade but dabble in repair work… Because you’re a landlord, your rental property is your business, which will then make this type of insurance very necessary to obtain, especially if you intend to make property repairs yourself.
Think About Tenants and Property
You might be thinking that any tenant is a good tenant, but as a landlord, you’ll have to decide what kind of tenants you’re searching for. The main reason for this is it’s going to help you effectively market your property, making sure you find tenants quickly and those who will stay longer.
It’s also going to influence how you handle your property. For example, you might be looking at furnishing your apartment or keeping it empty. If you’re living in a town with many young professionals, they might be looking for a more permanent rental and would bring their own furniture. It’s smart to think about these beforehand.
A Landlord is a Broad Term
As discussed above, a landlord is much more than simply collecting the rent check at the end of each month. You’re going to have to do a little bit of everything.
At the start of your business, you might be checking out loan options or fixing up a new house. You’ll have to learn a bit about marketing in order to attract tenants, get an intro to accounting for your bookkeeping needs, and read up on rental laws.
You might even have to put on an investigative hat to screen potential tenants and learn to negotiate with others in the business.
Hopefully, you won’t have to go knocking on doors constantly if the rent is due but that’s also part of the job.
You Need to Have a Good Grasp on the Numbers
You don’t need to be a math whizz-kid when it comes to handling your budget and expenses, but it pays to be on top of your numbers.
After purchasing your first property, you’re going to have to decide how much to charge for rent. This requires research on the area and examining your own books. You want to be sure you’re charging a fair price while also making sure you have enough to pay the mortgage, leave some for unexpected expenses, and ultimately make a profit.
Don’t forget about taxes and insurance as well, payments that can easily sneak up on you and add up quickly if you’re not careful.
You Won’t Be Going Alone
Even though being a landlord may seem like a solitary business, you’re going to have to assemble a team to work with you. Even though you may have a basic grasp on marketing, legal, accounting, and management, you’re not going to be an expert on all of them.
That’s why it’s important to have a legal expert examine your rental contract or help you set terms and have an accountant who can help you manage your books or answer any questions.
If you end up owning multiple properties, you might want to hire a property manager to help you take care of all the little things. Make sure you’re finding people who want to work with you instead of telling you how to run your business.