5 Rules For Being A Landlord – It’s Not A Fairytale!
5 rules for being a landlord – it’s not a fairytale!
When I was a child, I dreamed of owning a mansion with many rooms and a beautiful courtyard. As I got older, the dream changed to owning a residential rental property. I told myself that the buildings looked similar in many ways (even down to the courtyard). I picked out paint colors, and I saved my money until the “right” investment property came around. Here’s the problem… I had never thought about real estate investing as a job before, and I certainly never dreamt about maintenance repairs, tenant conflicts, taxes, insurance, or collecting rents. I never thought about the team of people I would need to hire and often train to help with the responsibility. I never understood that the mice in Cinderella were really a pest control problem. My fairy godmother and my Prince Charming were otherwise engaged. My fairytale ending was not looking promising!
Perhaps you have felt this disillusionment happen to you, or perhaps a different kind of property has simply become too much to manage. The good news is that there are many ways to overcome the challenges you are facing, and there are many people who can help. If you take the time to learn the following five rules, you will have a more successful experience.
Rule 1. Focus on your real goals. Are you really interested in having rental properties as a business or was your dream really about something else? Real estate rentals can be lucrative, but they are not for everyone.
Rule #2. Understand your numbers. Do you have the financial ability to not only buy but also weather the storm? Any homeowner can tell you there are unexpected expenses, but rental properties have even more. Make sure that you have enough in reserve for vacancies, evictions, and repairs.
Rule #3 Build a winning team. You can’t do this alone, so you have to build a list of people and professional businesses that can help you take care of the many demands of this business (lawyers, accountants, contractors, etc.). If you decide to outsource your work to a property manager, be very clear about what they expect for management fees, account reserves, and what services they will provide.
Rule #4. Get educated about the rules for landlord-tenant rights in your area. Remember that this might be your property, but it’s also their home.
Rule #5 Know your exit strategy. If things don’t look like your fairytale, you can sell to a reputable investor without commissions frequently, and get your cash out fast. There are other ways to invest that may fit better into your financial strategies.
I still have that first rental property, and I have learned a lot about real estate investing now. I have watched those with less luck, stamina, or knowledge flounder. Being the landlord isn’t for everyone, especially as we get older and our life priorities change. If you follow these rules, you’ll have a good start!
For more information, visit firstlighthomes.com or email to [email protected].