Buying a first home is something that can be exciting and rewarding. And as you move forward into your future, one step that may be considered at some point is to invest in properties that you can earn an income from. In particular, rental properties are often considered as a viable financial asset – and they can be.
However, many new homeowners are surprised by the challenges that being a landlord can bring. It’s true that rental properties can be a reliable income stream, but it’s also true that the stress they can bring will sometimes be more than you bargained for. With that in mind, here’s a look at five things you’ll want to know about before you make the leap and become a landlord.
Don’t Rush The Purchase
It’s easy to get excited and buy the first rental property you find. However, it’s much better to take your time and really do some research. You need to know not only what the laws are that landlords must abide by, but also take the time to really find a property that matches your needs and your goals the best. Rushing into things makes it harder to find that perfect opportunity.
Look At Better Neighborhoods
You can’t afford to rush your investment choice, and you also shouldn’t feel like you have to settle. The idea of buying rental properties in less desirable neighborhoods is simple in theory – buying a home for half the price of one elsewhere means that you save money.
But neighborhood problems and lower-income tenants can lead to higher eviction rates, higher maintenance costs, and more. It’s often better to buy a rental property only if its’ somewhere that you yourself would want to live.
Include Vacancies in Your Budget Plan
Even if your rental is in a high-demand area, the fact is that sometimes you’ll end up with a vacancy. You need to be able to plan ahead for this, including all of the costs associated with a vacant property in your budget. You may need a month or two to find an adequate renter, and you’ll have to foot the bills on your own during that time.
Set Clear Expectations and Rules
You need to be sure to provide clear expectations as to what kind of maintenance issues your tenants are responsible for. For instance, you’ll want to include on the lease whether or not tenants are required to handle lawn work on their own. Be sure to clearly define what you’re expecting from your tenants.
Find A Property Manager and Define Their Role
You’ll also need someone to help out unless you just have huge amounts of free time. A property manager can help with everything from collecting rent to handling maintenance and more. You’ll need to find a trustworthy property management organization or an individual that you can trust to take care o the job.
However, you also need to be sure to clearly define what is expected of them. This way there is no confusion about what they should be doing and what you need to handle yourself.