Thinking about going into the landlord business? If you are then you’d better be ready for a lot of work, even before the tenants move in.
Finding just the right rental unit is a difficult process and doing it correctly can be something that secures your future success as a landlord. To find a property you can hire a real estate agent and see the available selections or you can get in early on the desirable properties by networking with the right people. Get to know bank employees and people down at city hall so you hear about foreclosures early. Join a local landlord’s group to get more contacts and information. And be willing to make a bold move and ask a property owner if he or she wants to sell.
Study the area and see which locations are most desirable to renters so you always have a pool of quality applicants to choose from. Getting the right tenant is key and having a property that draws the right people is a great step toward that end.
Once you’ve found a few prospects, investigate the asking price and the value of similar properties in the area. Some landlords have formulas to determine a fair asking price and there are computer programs that attempt to provide you with the same information. But you basically need to make sure that the rents will cover our out of pocket costs and plan on a vacancy rate of about 5%.
In addition to examining the financial end of the properties, look at them structurally to see what expenses you may have in the future. These expenses can add up quickly and you don?t want to dive into a money pit.