01Are You Cut Out to Be a Landlord?
All those number-crunching skills that serve you well in selecting, buying and selling real estate properties for investment are valuable. However, as soon as you take on the roll of landlord, people skills are also quite important.
Landlord-tenant relationships are often complicated by a lot of legal stuff, but in the end, it's more customer relations. If your tenants are happy, they generally don't cause trouble and they pay their rent.
02Don't Let Your Investment Manage You - Avoid Landlord Burnout
Maintain your life's balance, and plan your management activities to maintain profitability of your rental properties without letting your investments manage you. This is particularly important when making a decision to move up to multiple properties when one has been a positive experience.
When the housing and mortgage crash was in full swing, investors were taken out of the game as well. However, generally it was those who were over-extended or stuck in flip deals they couldn't unwind before prices dropped.
One of the most important tasks confronting the real estate investor-landlord is the selection of tenants. Shortcut this process and it can cost you more than money down the road. Learn the simple steps to intelligent tenant selection.
These days there are multiple online companies specializing in vetting tenants, from credit checks to full background investigations. The fees can be reasonable, especially compared to the cost of eviction.
04Setting the Rent - Cover all the Bases
Some might think that deciding on the rental amount for a property is only a matter of matching the market rates. That's an important factor, but there is room for manipulation of the rent price based on other factors. Learn how changing the rent amount at the beginning can influence tenant choices and long-term occupancy.
This isn't just a one-time activity either. In fact, you should be doing market rent analysis at least annually, especially before lease expirations.
A rental property is a home or office also. Using the property on a day-to-day basis will cause wear and tear, and repairs will become necessary. Plan and budget for these problems, and learn how to handle repairs to keep your tenants happy. How you treat the property speaks to their treatment of it.
Budget repairs into your rents and save that money in an account for repairs. If you get used to spending it, you could come up with some surprises that damage your ROI considerably.
In recent years, there's been a great deal of media coverage of property and health problems related to mold. A few large damage awards, as well as many insurance companies dropping mold coverage, have caused a great deal of concern among real estate professionals and landlords. Learn how to react to and handle a mold call from your tenants.
The Author: Chris Smith is a real estate investor, founder of an online reference for investors and real estate professionals and has published articles in Corporate Finance Magazine, Euromoney, and the Business Journal Network.
Top 6 Tips Landlord Guide - Basics for the Real Estate Investor
Compared to flipping properties, landlording is a long-term committment with demanding requirements of your time. Before you take the steps toward the job of landlord, examine your capabilities and desires, and make sure that you're up to it. If you are, it can be a wonderful and profitable experience.