First, know the market rent for the area and follow it. You can determine the market rental for the neighborhood where your property is located by visiting real estate websites or simply contacting your real estate agent who can provide you with that information.
In fact, when bought and financed the property, the appraiser completed a Market Rent Analysis located in the appraisal report. This analysis is the result of a survey the appraiser compiled after researching market rent.
Be prepared for the late night or weekend maintenance calls. You can remember when you first rented an apartment or house and the hot water went out, right? What did you do? You called the landlord or property manager who came out and fixed or replaced the hot water heater.
You’ll be doing the same so get ready. It’s important that you have a cash reserve fund set aside for such emergencies. Homes will at some point need some work from a fresh coat of paint to replacing the air conditioning unit.
And if you’re not exactly considered “handy around the house” then you need a list of reliable contractors who can fix any problem. Before any repair work is needed, get referrals for plumbers, carpenters, and electricians.
Most importantly, properly screen your tenants. Once your tenants move in and occupy your property, they’re there for at least the term of the initial lease. Get a copy of their most recent pay stubs and verify their monthly income. Make sure that the rent being charged is around one-third of their gross income.
Review a copy of their credit report. There are online services for landlords that provide credit reports for your review. Make sure there are not current or recent late payments or outstanding collection accounts. Your property should cash flow each month but there won’t be any cash flow if the tenants don’t pay the rent on time.
If any of these issues make you pause a bit, there are property management companies that can do all the work for you for a fee. Most real estate offices have a property management division that can handle every aspect of being a landlord allowing you to simply sit back and count your profits!
If you’re a landlord, or ready to become one, contact a knowledgeable loan officer today.