Everyone wants to get in on the action when it comes to rental property; however, so many people also struggle with the process because they don’t come in with the right expectations.
Can rental property result in stable, long-term income? Absolutely, but that income is anything but passive and or easy to come by. There are plenty of growing pains that many new landlords deal with, but the right mindset and realistic expectations can make all the difference to determine your level of success.
So, what should you consider before you get serious about becoming a landlord? Keep the following four points in the back of your mind to set yourself on the right path.
Are You Treating Your Property Like a Business?
Just as you’d never jump blindly into a new job or investment opportunity becoming a landlord is no different. Certain protections simply come with the territory of rental property just as they would for a traditional company. For example, pursuing an LLC for real estate is a smart move that’s easy to overlook, but is akin to seeking protection for a traditional business.
Simply put, you can’t treat rental property like a hobby. Especially when you’re getting started, becoming a landlord is like a full-time job in and of itself. Think about it: from finding the perfect piece of property to screening potential tenants and beyond, there are millions of moving pieces for those in the early phases of renting property.
Are You Prepared to Ask for Help?
It doesn’t matter if you’re looking to rent beyond state lines or within your own backyard: you should expect to hire or seek help in some way, shape or form if you don’t want your property business to crash and burn. You won’t get very far if you go it alone, so consider some essential relationships for landlords such as…
- Your lawyer: there’s plenty of red tape that comes with the territory or being a landlord, so it most definitely pays to have a good rapport with your legal counsel
- A property management company: although this may be a “down the road” hire, sometimes it pays to have some extra hands on deck if you’re renting out-of-town especially
- Peers in the field: ideally, you can speak with other full-time landlords that can give you some advice from a personal perspective
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Do You Have a DIY Spirit?
Even with hands on deck, there are going to be many instances where you’re probably going to be the one getting their hands dirty when it comes to dealing with headaches. Whether it be problem tenants or quick repairs that don’t require an expert, taking a do-it-yourself approach can save you money and ensure that property problems get taken care of sooner rather than later. Oftentimes being a landlord is a bit of a trial by fire; however, the more you learn now, the better prepared you’ll be next time.
Where’s Your Next Tenant Going to Come From?
You can’t cash out on your property if it’s constantly vacant, can you?
Obviously it pays to do your homework on where exactly you plan on purchasing property. That said, it always pays to understand where your next tenant is going to come from and figure out whether or not your location is attractive to long-term renters. Just because you snag a sweet deal on a piece of property doesn’t mean that it’ll stay full.
Although you should certainly focus on pleasing your tenants and building positive relationships, you also need to be looking towards the future. After all, you never know what might happen with your tenants at a moment’s notice: “be prepared” should be the motto of any new landlord.
Again, being a landlord means dealing with a whole slew of issues all at once, but those who can handle the pressure have so much to gain in terms of their earning potential. Even if you’re just starting your journey toward becoming a landlord, understanding the answers to these questions could be make-or-break for your long-term success.