Are you ready to drop your boring 9-5 job and become your own boss? Funding a business can be pretty difficult. There are tons of requirements involved with getting a loan.
That doesn’t mean you still can’t realize your dream of being able to set your own schedule. It only means that you’ve got to change up your tactics a bit by becoming a landlord.
Getting a loan for a home that you can rent out is a bit easier than getting a personal loan for a business office. There are a few things that you’ll need to consider before you get started, however.
If you aren’t ready to have the hard conversations with your tenants, or you don’t invest in the right area, you’re not going to get too far. Keep reading to learn more.
1. You’ve Got to Do Background Checks
Things can be a bit tight when you’re a new landlord. You’ve just spent a bunch of money investing in a home to rent out, after all.
You’re desperate to fill it with tenants, so you can begin to recover your finances. That doesn’t mean you should speed through the screening process.
You’ve got to run a thorough background check. That means calling references and looking over credit scores.
You don’t need tenants who have a history of being late on their rent. That will affect your ability to pay your own bills.
2. It’s a Huge Financial Commitment
Becoming a landlord takes a huge financial commitment. Most people don’t have the money to get started sitting in their bank accounts.
If you’re one of these people, you’ll need to take out a mortgage. You’re not in the clear as far as money goes after buying the house either.
You’ll need to dish out the cash needed to fix up the property. You may want to make a few little cosmetic changes to attract tenants.
When you do bring in renters, you’ll need to have the money to meet their needs. If something breaks, you’re in charge of hiring a contractor to fix it.
To make life easier on you as a landlord, you may want to hire a property management service. They can be expensive, but they’ll take care of finding new tenants, billing, and scheduling maintenance.
You can go here to read more about what to consider when hiring a company.
3. Familiarize Yourself With Fair Housing Laws
There are a lot of laws that you’ve got to read up on when you become a landlord. The most crucial set of laws are the ones concerning fair housing.
Following them is required by the law. If you ignore them, you could get into serious trouble.
To summarize the laws, there is a lot that you can turn a potential renter down for. For example, you don’t have to accept a tenant with a low credit score.
What you can’t turn someone away for is their sex, race, marital status, or disability.
4. Be Ready for Confrontation
As much as you try to avoid it, there will come a time when you have to deal with confrontation. Giving an eviction notice never goes well.
Asking for late rent payments can also come with some resistance from tenants.
If you don’t have these awkward conversations, however, it will come back to bite you. Being too accommodating only encourages the late payments.
5. You’ve Got to Invest in the Right Area
Choosing the right area to buy a rental house can be tricky. Since this is your first real estate investment, you want to watch your money.
It can be tempting to buy a fixer-upper or invest in a house that’s in a rough neighborhood because it’s cheaper. We’re here to tell you to resist that temptation.
These problem houses might be more affordable, but you’ll have a harder time attracting tenants. It could be a while before you start to make your money back.
6. Have a Pet Policy in Place
Enough people have furry friends where it’s necessary to have some kind of pet policy in place.
We’ll tell you that it’s not a good idea to not allow pets at all. You won’t attract many renters that way.
You can also charge tenants who bring in furry friends extra on their rent. More money is never a bad thing.
In addition to pet rent, you should ask for a special deposit. This will cover repair costs in the event someone’s dog chews up the carpets.
Keep in mind that if you do decide to turn away renters with pets, you can’t say no to a service dog. Doing so is against the fair housing law we were talking about before.
7. Get a Lawyer Involved
The last bit of landlord advice we have for you is to hire a lawyer. There are a lot of requirements that your lease has to meet before you can legally accept tenants. The right attorney can make sure that you don’t forget anything.
They can also back you up in court if you have a nasty confrontation with one of your tenants.
Consider Everything Before Becoming a Landlord
As you can see, there’s a lot to think about before becoming a landlord. If you aren’t careful, you may break a law that could get you into serious trouble.
It’s also hard to attract new tenants if you have too strict of a pet policy, or you don’t choose the right area to invest in real estate. You can’t make money if you don’t have renters.
For more tips that will help you become the best landlord you can be, visit the Real Estate & Home section of our blog.