Education and news for smart DIY landlords!
Buying a rental property for the first time? It may cause a lot of stress for most aspiring landlords, but it doesn't have to be the same for you. If you do your research and learn some strategies that the pros use, I'm sure you will succeed. Below, I've compiled eight best tips and considerations for investing in your first rental property.
If you're looking for certain types of tenants, one of the most important aspects you should consider is the location. If you purchase a rental property near a university, you'll attract mostly students and expect vacancies every summer. Your rental should also be located in a neighborhood where decent tenants desire to live in.
Some people ask, "Will I do everything myself as the landlord or will I use a management service?" Realistically consider your schedule. Can you respond to tenant phone calls and emails at all times? Are you able to do background checks and interview tenants?
Before you start searching for rental properties, you need to think about the expenses. If you'll be using a mortgage, figure out how much money you'll borrow. Factor in additional costs such as tax and legal fees which may vary in different states.
Section 8 is a program run by the government that offers rental assistance. If tenants meet certain requirements, they get a housing voucher that allows them to find a rental within a price range. By renting to Section 8 tenants, you enjoy consistent rental payment and rest easy knowing that your tenants have been pre-screened.
If you're buying a rental with no tenants yet, you need to think of how you're going to attract quality tenants as quickly as possible. Try a mix of strategies such as advertising online, social media marketing, and apartment listing sites.
Landlords deal with more expenses than most people realize. For example, when there are no tenants, you'll have to pay for electricity, gas, and water. Be prepared to save 20-30% of your rental income for maintenance and emergencies. Make sure that your emergency fund is in a separate account, so you don't overspend your money.
You may find yourself buying a real estate property with tenants in it. In this case, these are your inherited tenants. The first thing you should do is to do a background check on the tenants. Meet them in person and introduce yourself as the new property owner.
At some point, you will have to deal with challenging situations such as unpaid rent, late rent payments, property damage, and vacancies. Some landlords try to avoid these situations by hiring a property manager. Also, prioritize quality tenants from the start. Have a solid tenant screening process.
Read more: 7 Ways to Avoid High-Risk Tenants
If you’re ready, make Landlord Prep your go-to resource for landlording education. Here, we offer a complete DIY landlording course to get you on the right track. Join our academy today. If you want, you can check out Flavia’s real estate investing webinar first!