Becoming a landlord is easier said than done. Many beginner real estate investors have a common misconception on what landlords actually do. Becoming a landlord is more than just cashing the rent checks and making mortgage payments. It’s about managing your property and ensuring your tenants are taking care of your property alongside you.
Simple points to follow when becoming a landlord of multi-family real estate
Rent checks are the reason you’re in the business
Pursuing rental income is why you’ve decided to become a real estate investor and ultimately a landlord! Real estate investing focuses greatly on the importance of cash flow from each rental property as properties can turn into a nightmare for the landlord if they ended up becoming negative cash flow income properties. On the sunny side of town, real estate investors make it clear to their tenants that their rent checks are the entire goal. If you’re a beginner real estate investor and not sure what to do after becoming a landlord of multi-family real estate, just make sure to be steady with collecting the rent checks. Otherwise, if a tenant is purposely not paying rent, you will need to go for an eviction to cut your losses.
If you find yourself in a jam and are not sure what to do with your tenant, read this blog post: What Landlords Need to Know About Filing an Eviction Notice.
Partnerships are solid when buying rental properties with the right partner
Becoming a landlord does not necessarily mean you have to do it on your own! You can join hands with a real estate investor who’s done the whole becoming a landlord of multi-family real estate before. This can help you in the process of finding an adequate property to give you the desired return on investment and help you manage the property more professionally. It’s important to find a business partner that shares both your short-term and long-term goals. After all, you don’t want to be 2 years into an investment property only to find yourself trying to buy your partner’s share or risk losing it.
In addition to buying multi-family real estate, investors can go for real estate partnerships in almost every field of real estate investing; they can go for wholesaling real estate or even fix-and-flips. The world is your oyster. Really!
Tenant screening should be a clear process
The dreadful tenant screening process is the heart and soul of becoming a landlord. Real estate investors must carefully select the person that’s going to reside in their investment properties. The best way to screen tenants is to create a process out of it. The most successful real estate investors and landlords go for applications. In these applications, the prospective tenant will have to submit past landlord references, credit checks, criminal records, and even pay slips. This whole process can make becoming a landlord of multi-family real estate a much easier deal. Yes, it will take you a few hours of work to screen each tenant, but it’s better to eliminate your headache in the long haul.
Looking for key points to keep in mind when screening tenants? Read this blog post: Tenant Screening Process: Red Flags Landlords Should Not Ignore.
Have a strict pet policy
No one wants to be the bad guy and tell the tenant that he/she can’t have a pet! It’s a thing that any landlord will have to go through to ensure the property stays in good condition. Even if you have a pet yourself in your home, becoming a landlord is not about the love for those furry little friends! It’s about cold hard cash. When you allow a pet in your rental property, you are allowing floor damage, wall damage, stains, and smells. The list can go even further.
As a result, real estate investors have found ways to make sure pets are accommodated while protecting their properties. This magical method is simply having a pet deposit. Additionally, becoming a landlord of multi-family real estate means you will have many applicants with pets applying to rent out your property. You can filter them out by allowing a certain size or height of pets only.
To get more details on becoming a landlord with pet-friendly income properties, read this blog post: How to Succeed as a Landlord with Pet-friendly Rental Properties.
Be fully aware of the tenant-landlord laws in your area
Becoming a landlord can be a tricky one if you don’t know about the rental laws in your area! A great tip on becoming a landlord of rental properties is to hire a real estate attorney or a tenant law attorney to make sure you’re fully aware of your rights and obligations. That being said, beware of squatters as in many states they can create an issue for you while damaging your property along the way.
Renovate what can yield more rental income
Yes, we all want to be that landlord that has a hot tub in his/her rental property! It’s really just for show! Having a hot tub or jacuzzi will not bring value to your investment property. On the other hand, installing solar panels or updating the kitchen or even buying a new fridge can add value. In any case, just ensure to invest in what can be returned to you in the form of rental income.
Analyze your property
Running a thorough analysis of your investment property is a must whether you’re becoming a landlord of single-family properties or multi-family properties. The best way to analyze a property is by conducting a thorough comparative market analysis through an investment property calculator. Let’s take Mashvisor’s comparative market analysis as an example. You can find out the cash on cash return, cap rate, rental income, and even Airbnb occupancy rate for any given property while comparing to other properties in the same area or neighborhood that are similar.
Click here to make use of the 14-day free trial with Mashvisor’s comparative market analysis.
Related: Learn How to Evaluate Multi-Family Investment Properties
Finance properties the smart way
Many real estate investors have gone for the good old-fashioned mortgage to finance their investment properties. Generally speaking, there’s nothing wrong with that if you think the financing method is what works best for you. Meanwhile, many have gone for family financing, or even hard-money lenders and have managed to become among the most successful real estate investors. Just stay informed of the details of your financing strategy especially if you don’t have a fixed-rate mortgage!
Looking to find real estate financing methods? Read this blog post: Discover the Most Popular Real Estate Financing Methods.
Final thoughts
Becoming a landlord of multi-family real estate is even harder than becoming a landlord of single-family properties! So, make sure you’re fully equipped with tools that can ensure that you’re making money in real estate along the many successful real estate investors.
Do you have a free Mashvisor account? Click here to use our Property Finder and find properties in a matter of minutes!
If you have any more insights on becoming a landlord, please share them with us in the comments section.
