Breaking into the landlord game isn’t easy. While many TV shows make it look like it might be easy, it’s not as easy as it may look.
If you’re considering buying a rental property, you should be well prepared. There are plenty of things you will need to do and consider. Here are five tips to help when buying a rental property.
- Take the Long-Term Approach
- Know the Landlord/Tenant Laws
- Budget for Unexpected Repairs/Issues
- Location, Location, Location
- Hire a Property Manager
Take the Long-Term Approach
Becoming a landlord is a long term investment. One of the mistakes many people make with any investment is selling it too soon. With rentals, you need to hold onto them and look at it as a long-term investment.
As you collect rent and pay down the principle mortgage on your properties, you’ll be able to eliminate the principle and grow your cash flow. Take a long-term approach with rentals and you’ll have a better chance of success.
Know the Landlord/Tenant Laws
Ignoring the landlord/tenant laws is a dangerous business. You should know what you can and cannot do with security deposits and all other facets of renting a property to a tenant.
Take the time to learn the tenant laws for your state before buying a rental property. This will help you to avoid disaster in the future if you happen to break one of the laws without even knowing you did it.
Budget for Unexpected Repairs/Issues
Rental properties come with a large responsibility and possible repairs/issues around every corner. You want to save between 20% and 30% of your rental income just to cover maintenance and emergencies.
It’s also a good idea to have a solid emergency fund for the unexpected. While normal maintenance can be anticipated with most properties, some issues simply cannot be predicted.
Location, Location, Location
Just like anything with real estate, the location matter quite a bit when buying rental properties. However, the location you’re looking for with a rental property may not be the same as what you’d choose if you were just purchasing a home for your family.
Rentals in areas with the best appreciation may offer lower cash flow. When you decide to buy a rental property, consider both of these aspects as cash flow can help make up for slower appreciation. If you plan to purchase multiple rental properties, it may be a good idea to have a few rentals offering more immediate cash flow, while others provide more appreciation.
Hire a Property Manager
While you may want to get your feet wet as a landlord with your first property, once you own a few properties, it can become more than a full-time job. Hiring a property manager will free up your time and provide many other benefits.
A good property management company will help to ensure you adhere to all landlord/tenant laws, rents are collected property, and all leases are renewed in a timely manner. With a property manager like SunCoast Rentals, much of the guesswork will be taken out of the equation.
When you’re ready to buy a rental property, consider these tips. It’s a big investment and with the right approach, rental properties can certainly pay off in the long-term.