About to become a landlord? Whether you’re a new landlord, or a landlord to be, if you’re searching for information on how to become a landlord, you’ve definitely come to the right place.
What does becoming a landlord entail?
To become a landlord, you simply need to own a rental property and rent it out either traditionally or short-term on platforms like Airbnb. So, to become a landlord, you need to first and foremost buy a rental property. But it’s much more than simply that.
Being an investor and getting into the real estate world means you’ve become the owner of a business – your own real estate business. And treating real estate as any other business means you have a lot of factors to consider. Real estate involves management of people, getting access to resources, making connections, paying your dues, managing costs, following up on legal matters, etc. Read through this blog to gain insight on how to juggle these responsibilities as you become a landlord.
Related: Is Being a Landlord the Right Choice for You?
How will becoming a landlord help you make money?
It’s pretty simple.
Like any other investment opportunity, real estate investing is a cash making investment. It’s not quick or easy cash, but it’s one that’s worth it in the long run. Investing in real estate will provide you with a source of steady income, overall financial security, and tax benefits. Investing in real estate also means that you enjoy leverage and appreciation of your property. Some profits come directly from cash flow; others may come from how much your property increases in value over time.
Mashvisor’s tips to become a landlord
Tip #1 Find a real estate market
To become a landlord, firstly figure out whether you want to invest in the city you’re currently based in, or if you want to try out of state investing. But in general, to find the best real estate markets in the US, use Mashvisor. Our investment analytical tools will help you determine the top cities, neighborhoods, and properties to invest in. More specifically, Mashvisor’s investment property calculator will allow you to obtain predictive and automatic calculations for different real estate indicators to help you decide where best to invest.
Tip #2 Do the math
Not all of us are huge math fans, but you’ve got to do your math if you want to succeed as a landlord in specific and a real estate investor in general. Ask yourself questions like: What tax benefits are you getting from your property? What are your rental costs*? What are your CoC return and cap rate? Figuring out these indicators will help you sort out your finances and will help you make decisions like how much to charge tenants for the property.
When pricing the rent on your property, you need to consider different factors. Your price needs to cover the costs of the property and bring you profit, while remaining competitive in the local market. So, check out the prices of close by properties in the neighborhood to ask for a reasonable, yet competitive price. The key move is to think strategically. You don’t want to charge too much, but you also don’t want to barely make ends meet. Find a happy medium and stick to that.
*Costs to remember: Rental expenses such as mortgage payments, repair and renovation costs, fees, and taxes, among others.
Related: Renting Out Your House? How Much Should You Charge?
Tip #3 Learn the landlord-tenant law
First things first, and before you become a landlord, you need to know the landlord-tenant law like the back of your hand. If you feel like the legal lingo and matters in general are confusing you, consult with a real estate lawyer. There’s nothing worse than getting caught up in a legal battle over something you could have avoided by simply asking others. You want to make sure you know your state and federal laws in general as well. For example, if you’re investing in an Airbnb property, state laws may be different from one city to the next. New York City and San Francisco are known to have more strict laws for home-sharing real estate businesses such as Airbnb. So, make sure to acquaint yourself with most legal matters before you decide to become a landlord.
Tip #4 Choose wisely
Learning how to choose good tenants is one of the most important things you can do when learning how to become a landlord. Good tenants will save you lots of effort and money in the long run. You want to find tenants who maintain the rules you set, keep your property in a good shape, pay their rent on time, and who generally follow the lease agreement that you set up.
You can do tenant screening, checks, and interviews to make sure you choose the right tenant. Also check in with a tenant’s previous landlord. You can never be too thorough when choosing your property’s occupants.
Tip #5 Consider professional property management
There are always arguments when it comes to using or hiring professional property management in real estate. Some real estate investors attest that it’s the best thing they’ve ever done in their career, while others think that it’s just not worth the money. To decide, you have to figure out whether or not you need professional property management. If you’ve just become a landlord, and you feel like you need help in managing your investment property or properties, do consider the help of a property management company. Often times, these firms will save you a ton on costs, risk, marketing, and time. Other times, their costs are just not worth it financially. So, make sure you do the math before considering rental property management to make the smartest decision.
Related: Airbnb Rental Property Management: A Must or a Waste of Your Money?
To become a landlord is to assume many responsibilities. It’s not an easy job, but if you do the work, there’s no reason why you cannot become a successful landlord. Finally, make sure to regularly check back with Mashvisor for other tips on how to become a landlord and more!