As the premier property management company in Suisun City, we know that becoming a landlord is a great way to make money and help people at the same time. If you are thinking about entering this field, you may be wondering how the professionals do it. You may have questions about starting off as well how to handle issues such a rent collections and making a property attractive. Becoming a landlord can seem daunting but be assured that it is both easier than you might think and highly profitable. At our company, we’ve been property managers in Suisun City and the surrounding areas for a long time. During this time, we’ve learned a lot. Here are a few tips that we’d like to pass on anyone who is thinking about joining us in this ever-growing and utterly amazing industry.
Investigate Before You Begin
Before becoming a landlord, you need as much information as possible. You will need to think about many issues. This includes the kind of property you want to buy, your prospective tenants and the profits you hope to earn. It also includes other specifics such as the state of the local rental market. Rental markets can vary city by city and even neighborhood by neighborhood. It’s a good idea to speak with professionals like us and tenant groups as well as investors before you decide to commit to a single property.
Have Enough Savings
One of the most important things you can possibly do before becoming a landlord is to make sure you have enough cash on hand. You should always have enough funds in the bank not only to pay for any underlying costs of the property such as insurance but also to pay in the event that a problem develops. A single two-hour period of heavy rain can cause huge damage. You need to be able to offer your tenants a roof over their heads or pay for a refund of the rent.
Know the Tax Laws
Another factor that is important when thinking about becoming a landlord is tax laws. Tax laws governing the use of rental property are different than laws than laws that govern your primary residence. It’s a good idea to spend some time finding out which laws apply in your case. You may find that there are local incentives for landlords in a specific area that can make it ideal to rehab a home and then rent it out. This may include investigating both local and state laws. In many cases, consultation with a lawyer can help you draw up a standard contract that you can give to all potential renters that is legally binding. This will make sure you are protected legally should the tenant engage in behaviors such as leaving without paying the rent or housing people who are not on the lease.
Take a Class
If you are just starting out, you may be delighted and surprised to find out that many resources are available to help. Many state and local governments offer specific resources that are useful for someone who has never been a landlord before. This often includes low-cost or even free classes that can help you with issues you might confront during your tenure as a landlord. A class can take you through the basics of owning and renting a property such as making small repairs to the kitchen appliances or how to paint rooms professionally. A short, low-cost class can help you gain valuable skills and become a better potential landlord at the same time.
Network With Others
When becoming a landlord, it’s often helpful to speak with others who are also involved in the business. A social network of landlords can point be invaluable. They can help you discover things that might otherwise be hard to know about on your own. For example, they can help you be aware that a developer might be planning to open a new mall or that mortgage rates have fallen drastically. They can also help you understand specifics about increasing your business that can help you branch out from a few projects into more involved projects. Professional landlords often know exactly how to manage their apartments and other properties well. They can help you discover how you profitably follow in their footsteps and enjoy much of the same financial security they do.
You Need to Vet Your Tenants
One of the most important aspects of renting out your properties is choosing the right tenants carefully. A good tenant will help you build equity and make your life easier. A great tenant is someone who you can develop a long-term relationship with that can be of use to both of you. On the other hand, a tenant who is not ideal can cause all kinds of problems and may lead to long-term financial losses. You need to figure out how to find them. Running credit checks should be your first step. A low credit score means that the person has had trouble managing their finances as well. You should also ask for financial documentation as well from their employer or evidence of regular social security or other government assistance.
The Kind of Property You Want
Rental property varies from place to place. Some places have lots of apartments for rent while others have only a handful of houses that might occasionally be for rent. In many cases, becoming a landlord means owning several types of rental property. Just like other forms of income and investing, it is best to have a diverse portfolio when investing in real estate. You can increase the number of properties you own over time by investing at least part of the profits you earn in an additional property. Think about investing in a single condo and then investing in a two-family house and perhaps even several houses. This will help protect you against any potential changes in the housing markets and make you a better landlord in the long run.