If you are considering purchasing an investment property or already own property and would like to make a regular rental return on your investment, there are some things you should be aware of. Becoming a landlord may be simple enough in principle but being a good one is a different ball game.
If you want to make money, develop a good reputation, and make a real go of it, read on for some hints and suggestions. Here are 5 tips to help you become a successful landlord.
Find the right properties
Anyone with adequate funding can go out and buy a property. When it comes to being a successful landlord, however, buying the right property is fundamental. Two of the first things you need to consider are the target market and area.
If, for example, you are looking to purchase in an area that is renowned for the quality of its universities, you may want to consider purchasing an apartment situated in a locale perfect for students. Perhaps you want to focus your attention on the young professional market and are looking for a property close to local bars and restaurants.
Make an informed decision based on these factors, and you shouldn’t go far wrong.
Speak to local real estate professionals
Hiring the services of a local agent could make life a whole lot easier. As an investor, you want to acquire property at the best possible price. Once a property hits the market and interest generated, the purchase price needed to secure it may mean that the figures no longer stack up.
An agent can not only guide you in terms of local market trends but may also be able to source high quality off market properties through their contacts. This will allow you to purchase property at a competitive price, thus maximizing your investment.
Many agents are also experts in 1031 Exchanges and will guide you on the best way to sell and purchase property to allow you to defer payment of any federal or capital gains tax which may be payable.
Treat your tenants fairly
Many landlords don’t care if their tenants are happy or if their properties meet a reasonable standard – all they care about is the rental income. If you want to be a successful landlord, don’t be like them. Your tenants are paying a lot of money to live in your property, so it is only right that they are treated fairly, and the conditions they live in meet the same standards you would expect. If you encounter an issue with the boiler or the oven breaks down, don’t leave your tenants for weeks without heating or a means to cook. Have the items fixed or replaced as soon as you can.
You must bear in mind that it will cost you money to find new tenants and have new rental agreements prepared, so it’s in your interest to keep them happy. Not only that but having one tenant who stays for a long time is far less hassle and stress than switchovers regularly taking place.
Keep your property maintained
Not only do your tenants benefit from a well-maintained property, but you do too. Small maintenance issues that are left unattended can very quickly become bigger. The tiny area of damp that your tenants noticed could become a nightmare in the long term and could very easily result in your property’s value depreciating.
A similar situation applies when it comes to decorating or making upgrades within your property. If the kitchen if falling apart or the rooms look grubby, dated, and tired, you may struggle to maximize rent levels. A lick of paint or some upgraded kitchen cabinets will not only make your property look better but could make all the difference when it comes to monthly rent and the asking price in the event of a future sale.
Have a contingency fund
Investing in property can be a very lucrative decision, but it can also be costly in the short term. It’s a good idea to have a contingency fund in place so that if anything unexpected should happen, you have the financial means to deal with it. There may be times, for example, when you have no tenants in situ but still have a mortgage and bills to pay.
A contingency allows you to deal with issues as and when necessary and could provide a helping hand when it comes to your long-term success.