At Ali Safavi Real Estate we always recommend getting a rental property if you have the means to do so. It’s great passive income and a skill you can carry on to future investments. However, don’t fall into the mental trap of thinking just because it’s “passive” income that means it’s easy or a sure thing. Being a landlord is not always easy or pleasant. It may not even be profitable sometimes. Property management is a job you must be prepared for. Here’s 5 tips from Ali Safavi Real Estate on how to get started.
Step 1: Start Small
Going too big too fast can be a recipe for disaster when it comes to becoming a landlord. You don’t know what you don’t know. So when problems arise, and they will, dealing with an entire apartment building can be overwhelming. Don’t be afraid to just dip your toe in. Buy yourself a property that has a second unit, i.e. a guest house. This way you are only dealing with one tenant and one set of problems. It won’t make you rich, but it will be a big relief in your monthly mortgage payments.
Step 2: Understand the location
Location always matters when it comes to real estate. You should never buy based on cost alone. Making a new investment in a new city can come with a world of problems simply because you don’t know the area. It makes it harder to speak with perspective tenants about the area, especially when it comes to school, safety, and entertainment. You’ll also have to start from square one finding repair men you can count on – which is not always easy.
Step 3: Become A Fixer
If sticking your hand down a drain sounds disgusting, then being a landlord isn’t for you! Part of the job is making repairs. Don’t waste money or time waiting for the repair man to come for every little thing. It’s not always pretty, but it’s part of the job.
Step 4: Find The Right Rent & Tenants
I combined these two because they often go together. Finding good tenants is always important, but this is especially true if you are living on property. Can you imagine coming home every day and dreading seeing the person you share half a house with? Don’t do that to yourself. Find someone you really like.
Obviously you will have set a price for rent before meeting any prospective tenants. Everyone should be visiting the property with a price in mind, otherwise you’re just wasting their time. However, if you love a certain person or family and they counter with a reduced price, at least consider it. I know an owner that really loved a couple who wanted the guest house, but asked for $100 monthly reduction. They ended up working out a deal where the tenant would watch they’re dog and water the plants while they were away. It worked out perfectly!
Remember not to take a good tenant for granted. You’d be surprised (or not) about how many renters can be nightmares.