If you are planning to invest in real estate, then you should definitely consider becoming a landlord. Since homes will always be in demand, you stand a good chance at generating consistent monthly income from your rentals provided you manage the properties effectively and keep all costs in check. And below, we look at a few top tips that can help you succeed as a landlord.
You might think that being a landlord might require a large amount of capital. This is only partially true. Since you are dealing with real estate, you will inevitably need a decent amount of funds with you. However, you don’t have to pay for your rental property in full when you buy them. Instead, you can take a mortgage on the property and then use the rent to pay off the debt. And depending on your yearly income, you can easily amass two or three properties without breaking the bank. Once you are comfortable managing the affairs of the property and have enough cash flow to invest more, you can look at expanding your business and start accumulating even more homes.
The most important determining factor of any real estate is the location of the property. Make sure that the property you are interested in is in a very populated place that sees high traffic. Such properties will give you the highest rental income. On the flip side, they will also be more expensive to buy than other properties. For cheaper options, focus on areas that are only developing right now and is poised to see massive growth in the coming decade. You can invest in low-cost properties in such places and start earning high rentals in a few years when the pace of development takes off.
Before you invest in a rental property, you need to ensure that the rent you receive will be able to cover your expenses and leave you with a sizeable profit. For example, if you have a mortgage of $400 on a property and also incurs $50 per month in the maintenance for the same, then you should ideally be able to charge a rent of $700 for the property. This will give you $250 in monthly profits. However, if the average rent of the place is just $500 and you are unsure whether your property will be able to generate even that amount as monthly rentals, then you are better off never buying the property.
Set up A Penalty System
Be sure to have a penalty system for rent payment delays. The amount of the penalty can be charged in daily or weekly terms, depending on how late the tenant is. You should be very strict about it. Any lax attitude you show can result in losses for you. If you aren’t strict, then the tenant might succeed in postponing multiple rents repeatedly. As a result, you might end up having to pay for the upkeep of the property without any return at all. A penalty system will keep the tenants in check and ensure that they do pay on time since they won’t want to pay any extra money for a delay in their monthly rent payments.
Follow The Local Rules
Always follow the rules of the locality when renting a home or doing any modifications to it. For example, sometime you might need to expand a property. In such cases, you may be required to submit a planning application that depicts what you intend to do with the home. In such situation, make sure that you do use the correct planning application maps to generate the map of your property and surroundings when submitting the application. Otherwise, your application might be rejected and you will have to waste time coming up with a new application. And are you looking for more information about planning application maps? If so, check with the contractor or builder as to which application to use.
Be Good To Your Tenant
Finally, be good to your tenant. If there is one thing that can sour the relationship between a tenant and a landlord, it is the lack of courtesy. Do ask them about their personal well-being from time to time. Similarly, invite them for any celebration at your home. Being in close contact with your tenant will make them feel more obliged to pay your rent on time so as to not disappoint you. Plus, when they do vacate the property for a newer one, they are more likely to refer their friends to be your new tenants.