Shakespeare once said something like:
Some are born to landlordship, some achieve landlordship, and some have landlordship thrust upon them.
In other words, some inherit their rental property, some go out and buy it and others become landlords almost by chance.
Owning rental homes as a path to wealth
Becoming a landlord is a great option to generate wealth, Warren Buffet even said he’d buy up “a couple hundred thousand” single family homes if it were practical to do so. If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down. Many individuals purchase rental properties to generate income because of the high demand for local rental homes. If you are ready to purchase your first rental property with just 3.5% down schedule a free consultation today.
Becoming a landlord
Their are many different forms of being a land lord. Some are entirely hands off, letting others do the work for them while some are up every snowstorm at 5am plowing and shoveling driveways. Whether you choose to take on everything yourself or leave tasks to other’s it is always a long list of tasks that to be profitable and safe must be done. Before you make the jump into owning rental properties know the 4 best tip’s for choosing the best rental home
Main task’s of a landlord
Finding new tenants
You’ll soon find how to reach your target market (prospective tenants). But today’s online platforms that offer local classified advertising, such as Craigslist, often prove cost-effective
Showing the home to potential tenants
This is primarily a sales opportunity that can help shorten the dead time between tenancies. But it’s also a way to weed out prospective tenants who are obviously unsuitable
Getting Leases signed
You must have a signed, watertight lease or rental agreement (they mean the same thing, at least in legal terminology) for each rental. You may have your attorney draft one or you could base yours on a template from a reputable publisher or website.
Vetting renters to avoid deadbeats and vandals
Various companies, some on the web, offer credit and background checks to landlords
Managing your building and business
Collection security deposit’s and rent
Don’t forget! Your wealth depends on it!
Setting and enforcing rules
Most successful landlords find it’s better to rigidly apply the rules. And tenants like the certainty that comes with knowing all tenants have to abide by the same regulations
Insurance and liability issues
such as swimming pools, icy paths and keeping the home up to code.
Keeping the track of the books and tax write-off’s
Make sure you can and do claim all the deductions available to you.
Taking care of repairs — There’s always something.
Well, nearly always
Understanding and observing local landlord-tenant laws
The only thing worse than being in court is losing in court
Keeping proper records for tax and legal purposes
Unless you think the courts and IRS won’t mind …
Tenant-Proofing your Rental
This is often great for the renter. Because they get to live in a homeowner’s pride and joy. But, if the tenant cares less for the home than the owners used to, that can soon change. In worst-case scenarios, the pride and joy quickly becomes a pig sty.To combat that risk, some landlords “renter-proof” their properties. That may mean covering easily damaged hardwood flooring with lino and inexpensive carpets. It might involve removing some vulnerable features that could be abused, such as a wood stove.
The latter may be a good idea, given that young children could burn themselves on those. And that could raise liability issues for the landlord. Oh, and the tenant could misuse it and accidentally burn down the home!But renter-proofing has to be considered in the context of your marketing. If you plan to attract high-end renters who will pay a premium, they’ll expect touches of luxury. And they’ll run a mile from lino.If people in your target market just want a roof over their heads, your priority should be to protect the value of your asset.
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Every landlord occasionally encounters problems with late rent. This is especially true if you operate in a market segment where some tenants have financially precarious lives, you may find late rent to be one of your biggest headaches. The best thing to do is being strict about prompt payments. That doesn’t mean you can’t occasionally bend the rules if someone has a genuine serious problem but you may find yourself in a deep hole if you get the reputation of being a pushover. When writing the lease make sure you specify the date on which the rent falls due.
Purchasing the Rental
I will dive deeper into this topic on a future blog post but this will give you a good base for understanding rental financing. This will also assume you do not already own a primary residence. If that is the case you normally need 15-25% down on a rental property. You are in luck if you do not own a home yet, then you can buy up to a duplex, triplex or 4plex for just 3.5% down with a FHA loan. You may even get the sellers to help pay for your closing cost. Click here for a prior blog post on how to purchase a home with no money down. Our team here is licensed in all 50 states and have helped borrowers purchase rental properties all over the country, from the Bronx to San Francisco. FHA approved lenders in Plattsburgh NY. In most cases VA loans can also be used to purchase a Duplex.