Becoming a property owner and ultimately a landlord is no small decision to make. If you go into it armed with the information you need, however, it could lead to a rewarding future in more ways than one. Are you ready to dip your toes into the vast sea of the real estate and rental business? You’ll need to arm yourself with plenty of ways to be successful, and we can help. Read on for tips on how to start a rental business.
Secure a Property Worth Renting
You can’t just buy the first affordable place that comes along and expect it to be successful. Not only do you need to consider the location first and foremost, but you also need to factor in things like crime rate, school system, job market, and more. Any worthy renter is going to be concerned about these things which is why you should be, too. Of course, doing so means you must secure the funding to get said property. Arizonians should seek out the help of Chandler hard money lenders to get the financing that’s needed.
Study the Screening Process
The crux of being successful in the property rental business is landing worthy tenants. And, while it can be a lengthy and arduous process, it’s always worth it in the long run. Have prospects fill out an application, call their former landlords, run background and credit checks, and evaluate their ability to pay rent each month. There will surely be temptation to with your gut instinct on some prospects but it’s imperative that you resist the urge. This is particularly true in consideration of the costly, excruciating eviction process.
Learn How to Prevent Tenant Turnover
Once you’ve got the rental property and tenants of your dreams, you need to learn how to keep these people happy. The first part of this is doing the research needed to price your property fairly. You don’t want to charge too much or too little, so finding the right balance is key. The same goes for knowing if and when to raise rent, as there is an inherent risk that this will cause tenants to leave.
You also want to find the perfect balance between being attentive and being annoying. In fact, what you might not realize is that there are very strict laws surrounding when you can go on your rental property once it’s rented out. You want to be available, however, any time there is an issue. Whether you’re the one who goes and handles the fix yourself, or you’ve assigned someone else to do so, prompt resolution is a must. Lastly, never underestimate the power of a small gift or other thoughtful gestures. It might sound silly, but a gift basket given over the holidays could be the difference in whether a good tenant signs another year’s lease or not.
Make Sure You’ve Got Emergency Funds
The cash flow from being a successful landlord is one of the biggest reasons many get into the business. However, issues are going to arise that are going to be costly—it’s a fact of life. You need to have an emergency fund to handle things like buying a new roof, repairing or buying new appliances, and other fixes that need to be done quickly to keep good tenants around. Also, as this Trulia.com article notes, “You’ll need to spend some money to ready the property for tenants, buy landlord insurance, and pay property taxes. If you’re taking out a mortgage, be prepared to fork over at least a 20% down payment.” And, as previously mentioned, getting a squatter evicted can cost thousands of dollars in legal fees. If you don’t have a financial cushion, it’s best to pursue this endeavor when you’re more financially prepared.
Preparation, persistence, and some good old-fashioned elbow grease can lead to a long and happy career (or side gig!) as a landlord. Follow these tips on how to start a rental business and this could be the beginning of a prosperous pursuit.